THE ROLE OF THE GUAYANA DEVELOPMENT CORPORATION
IN VENEZUELAN INDUSTRIALIZATION:
Diversification or Vertical Integration.
by
Antonio J. Azpurua C.
Bachelor in Architecture
Simon Bolivar University, Caracas Venezuela, 1980.
Submitted to the Department of Urban Studies and Planning
in Partial Fulfillment of the Requirements
of the Degree of
MASTER OF CITY PLANNING
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
May 1987
Antonio Azpurua 1987
The author hereby grants to MIT permission to reproduce and to
distribute copies of this thesis document in whole or in part.
Signature of Author
Department of Uban studies and Planning.
May 8, 1987.
Certified by
Lauren Benton.
Professor, Urban Studies and Planning.
Thesis Advisor.
Accepted by
e
VPhilip
L. Cl y.
Associate Professor, Urban Studies and Plann rIg.
Director, Master's Prog am.
MEASSACHUSETT-JS INS'MtyrE
OF TECHNOLOGY
JUN 0R 1987
LIBRA
i:O_
S
THE ROLE OF THE GUAYANA DEVELOPMENT CORPORATION
IN VENEZUELAN INDUSTRIALIZATION
Diversification or Vertical Integration
by
Antonio J. Azpurua C.
Submitted to the department of Urban Planning
on May 8th, 1987 in partial fulfillment of the requirements for
the Degree of Master of City Planning
ABSTRACT:
examines the Venezuelan Industrialization
thesis
This
that la Corporacion
the role
Process from 1936-1986 and
played in this process. The study
(CVG)
Venezolana de Guayana
weight the relative position of the main players in this process:
the government, the state-owned enterprises, and the private
sector, in order to understand how these players interact, and
help one to recognize the growing importance of the public
sector.
The current economic crisis is seen as a consequence of the
industrial strategy of import substitution followed by the
Government since 1961, and the emphasis on resource based
industrialization since 1973. CVG and its industrial program for
Ciudad Guayana was found to have played a major role in both
periods.
The thesis describes the political and institutional aspects
of the industrial development coordinated by the state and base
in Guayana since 1973. It explores the idea that the current
industrial strategy is based on previous investments but does not
satisfy the expectations of the private sector.
The thesis concludes that the role of the CVG has to be seen
Social Democratic
of the
in close relation to the role
abandon the
never
will
Democracy
Social
governments. The
the idea,
formulated
leaders
its
because
Guayana,
of
development
for its
responsible
feel
always
will
and
program,
launched the
industrial
the
by
expressed
are
goals
party's
The
progress.
strategy used to overcome the current economic recession, while
attempting to retain an public image of successful development.
The idea of the state as an engine of growth will not be
sustained by the current strategy followed by CVG if it does not
prove to be the best pathway towards progress and the production
of capital goods.
THE ROLE OF THE GUAYANA DEVELOPMENT CORPORATION
IN VENEZUELAN INDUSTRIALIZATION:
Diversification or Vertical Integration.
TABLE OF CONTENTS
ACKNOWLEDGEMENTS
1) INTRODUCTION
2) INDUSTRIALIZATION IN VENEZUELA
2.1) 1936-1958 period: Towards Democracy.
2.1.1) 1936-1945:
Post General Juan Vicente Gomez dictatorship
2.1.2) 1945-1958:
Struggle for power and dictatorship.
2.2) 1958-1973 period: Democratic era I.
Rise and decline of the political pact.
2.2.1) The political pact
2.2.2) The democracy and the economic plans
2.2.3)
The
role
of
"La
Corporacion
Venezolana
Fomento"
2.2.4) The industrial state and role of "La
Corporacion Venezolana de Guayana"
2.3) 1973-1983 period: Democratic era II.
Political economy of petrodollars.
2.4) 1983-1987 period: Democratic era III.
Crisis and devaluation.
de
3) THE OUTCOME OF THE INDUSTRIALIZATION PROCESS
4) CORPORACION VENEZOLANA DE GUAYANA
4.1) Introduction
4.1.1) Objectives
4.1.2) Goals
4.1.3) Industrial development
4.2) Organizational evolution.
4.3) New leadership - Leopoldo Sucre Figarella ( 1983-
? )
4.4) Recent economic objectives.
4.5) Division
of Industrial
and Mining Promotion ("Gerencia
de promocion Industrial y Minero").
4.5.1) Import substitution committee-CVG
and
promotion of new industries.
4.5.2) Identification of new investment
opportunities, promotion of new
industries and the
implementation strategy.
5) CONCLUSIONS
6) BIBLIOGRAPHY
Annex 1:
List of interviews done in Ciudad Guayana, Caracas and
Cambridge.
Annex 2: List of abbreviations.
ii
ACKNOWLEDGEMENTS:
This thesis has been
help
of
many
people.
completed
I
would
with
like
the
to
encouragement and
thank
all those who
contributed, in one way or another, to its realization.
My advisor,
addition to
Dr. Lauren
Benton, deserves
special thanks. In
her useful comments on earlier drafts of the thesis,
she helped to place many ideas in this
perspectives. Dr.
Institute
for
questions
that
Richard Auty,
International
led
me
to
project in
their correct
visiting scholar at the Harvard
Development,
revise
assumptions. Carlos Sosa Franco,
or
raised
fundamental
strengthen
my original
with whom
I discussed
many of
the ideas contained in this thesis also deserves special mention.
I must thank the Corporacion Venezolana de Guayana, for giving me
their support and help during my visit to their offices in Ciudad
Guayana and Caracas,
special
thanks
Delgado and Rafael Pena Alvarez.
Mariscal de Ayacucho",
go
to
Maria
Engracia de
I am grateful to "Fundacion Gran
for providing me with financial assistance
for the duration of my graduate studies.
I also
wish to thank Shubhada Bhave, Adela Illarramendi and
Susie Macksey, who revised previous drafts
and helped
me to put
the thesis together; Roberto Smith, for his friendship and advice
on some of the topics covered in this thesis; Alberto Cantor, for
his friendship,
for convincing
me to
iii
come to
United States of
America to study, and for his moral support
during the difficult
first period of my stay here.
I wish
to express my appreciation to many others. My friends
and classmates among them,
Marisela
Montoliou,
Shubhada Bhave,
Anthony K.C. IP, Hideo Obitsu, Jeff Hyman, C.Y. Nunez Ollero; the
Professors at the faculty of Urban Studies and Planning for their
support during
the time
of my studies, particulary Alan Strout,
Lloyd Rodwin, Al van Huyck,
adviser; and
the members
and
Ralph
Gakenheimer
my academic
of the Department of Urban Studies and
Planning administrative staff, among
them,
Rolph
Engler, Carol
Escrich, Mary Grenham, Kathy Rynn, and Jeanne Winbush.
Finally I
am especially
patience, understanding and
making this
thesis possible.
who supported and encouraged
grateful to my wife Vivian, for her
support
I am
me and
difficulties that I encountered.
iv
which
were
invaluable for
also grateful to my parents,
helped me
to overcome many
I) INTRODUCTION:
The
purpose
of
this
thesis
is to explain the current and
future role of the State's Guayana
Development Corporation (CVG)
in the industrialization of Venezuela. In order to understand the
CVG's
mission
it
is
necessary
to
examine
recent
recognize the main players in the process, identify
strengths and weaknesses
special
the Guayana
attention
to
industrialization process and
into
the
strong
links
the players'
and understand how they interact.
We will concentrate on
paying
history,
the
Development Corporation,
political
trying
between
to
the
dimension of this
provide
Social
some insights
Democratic Party,
"Accion Democratica", the democratic development of Venezuela and
the Guayana
Development Corporation. We will see how the success
of Venezuela's democratic process
the Venezuelan
and of
government sufficient
spur a regional development program
beyond
the
dimensions
encountered
scope
of
in
of
the
any
projects
their
for 1980.
If it
is to
industry gave
wealth and power enough to
in
Guayana
conservative
launched
implementation
from becoming a major export center,
the oil
which
economic
and
the
went far
measure. The
difficulties
have prevented the region
as was
initially projected
become such an export center in the near
future, it will be at a very high cost to the nation.
Today, when
financial
resources
have
become
scarce
as a
result of the decline in oil prices, Venezuelan industrialization
has to accomplish two simultaneous
stage of
tasks:
advance
into
a next
import substitution and achieve vertical integration of
the oversized Guayana complex.
Even
with
diminished
economic
capabilities, the state seeks to promote the reinforcement of the
state-owned enterprises,
sector, which
particularly
supported the
in
Guayana.
state in its industrial strategy of
import substitution, seems skeptical at this
state's
goals,
new
CVG
strategy.
must
In
order
convince
opportunities exist
The private
the
to
point regarding the
accomplish its industrial
private
sector
that
real
in the development of Guayana. This would be
proved by showing profits from installed plants, prioritizing and
facilitating future
projects, and
providing business guarantees
in order to reduce risks for private investors.
From the private sector's point
required investments
is still
of
so great
view,
control and
the state. In the midst
prevalent
since
the
project
has
yet
to
projects,
where it
where it is not completely dependent on
of
the
1970's,
place all investments in
magnitude of
that it tends to prefer
diversifying its investments in alternative
has greater
the
one
achieve
worldwide
there
economic uncertainty
is a natural reluctance to
concentrated
sector.
The Guayana
the profitable results that would
encourage the private sector to participate in the process. Also,
CVG is
in many
ways limited by political factors that influence
the decision-making process in such a way that guarantees made to
private
investors
remain
insufficient,
due
to
the uncertain
nature of that political process.
The
Guayana
industrial
program
is
also
tied
to
labor
movements, and
flexibility must be considered not only in market
terms but also
in
terms
of
the
labor
force.
The industrial
specialization mentioned before must also be seen in terms of its
political risks. My research
labor movements
in Guayana
recognized
the
importance
of the
but expressly excluded this variable
as beyond the scope of the thesis.
The
occurred
interest
in
1958
of
this
when
thesis
an
import
is
to
point
out
that, as
substitution program gained
impetus, strong new alliances must be formed in
order to advance
in a new era of capital goods production and vertical integration
of the
state-owned industrial
complex with
the private sector.
This will lead to the completion of the great export center which
Guayana was meant to be.
2) INDUSTRIALIZATION IN VENEZUELA:
What we expect to discover in this first
is the historical interrelation between
parties
and
the
principal party
private
in the
sector.
part of
the thesis
the state, the political
Accion
Democratica,
Venezuelan democracy,
the
sought to achieve
its political program through the simultaneous promotion of
social reforms (mainly a
the labor
land tenure
reform), through inspiring
movement, and also through fostering an environment in
which the industrial sector could achieve
time,
based
on
nationalistic
progress. At
principles,
the
the same
state has been
progressively developing its natural resources.
As it became stronger through the
success of
the democratic
process, the state took further steps, nationalizing gas, oil and
iron ore mines. When oil prices increased dramatically,
beneficiary was
the state and its administrators, who channelled
an important portion of these new
project,
the
its main
development
of
revenues to
their most prized
the Guayana region. The return on
this investment was meant to be more than simple profit: it would
be
a
signal
of
democratic system,
the
state's
to provide
ability, within the context of a
a stable
and prosperous economic
future for Venezuela. Thus, Guayana is the crucible of Venezuelan
democracy, a symbol and image of
the democratic
experiment. Its
progress is integral to the progress of democracy in Venezuela.
Venezuelan
industrialization
parallels
the
history of the
Venezuelan democratic process. The Guayana industrial
a
manifesto
resources,
of
the
decision
to
manage
program is
Venezuela's
natural
and the promise of a diversified economy.
2.1) Towards Democracy: 1936 - 1958.
2.1.1) Post J.V.Gomez-dictatorship: 1936 - 1945.
The period from 1936 to 1945 was characterized
by an average
Per Capita Annual Growth of 7 per cent and an average annual Real
Gross Domestic Product growth
moderate
rate
of
growth
of
was
more
than
3
per
cent. This
principally based on the dynamic
expansion of petroleum investments, production and exports.
After sluggish industrial growth Venezuela experienced in the
late 19th
century, Venezuelan industrialization process gained a
renewed impetus in the second half of the 1920's and in the early
1930's.
Researchers agree
that an
internal market was forming
during the period previous to 1936, due to the impact produced by
the development
of the
oil industry.
This period also showed a
reduced contribution of agriculture, and its
social consequences
(such as the growing migration from rural to urban areas).
After the
death of
the Dictator
Juan Vicente Gomez, during
the presidency of General Lopez Contreras
started
to
develop
explicit
(1936-1941), the State
policies on industrialization. In
1937
the
State
(Venezuelan
founded
Industrial
the
Banco
Bank),
Industrial
attached
to
de
the
Venezuela
Ministry
of
Development, which was geared to providing capital for industrial
activity
within
the
country.
During
this
period,
important sector was the commercial one, which was
of contacts
with foreign
most
the initiator
capital and closely related to banking
interests. At roughly the
sector was
the
same
time
(1936-45),
the industrial
slowly growing in size and economic power. It further
increased its volume and
World War
II certainly
production
capacity
after
1940, when
spurred the expansion of industry in the
country.
Sonntag
and
de
la
constant
growth
of
Venezuela's
previous
to
formulating an
1936
Cruz
provided
(1985)
internal
the
Industrial Plan
have
market
objective
that the
in the years
basis
to
start
for Economic Development. Such a
plan would make lucrative certain economic
then had
suggested
been only crudely developed.
activities that until
Authors Sonntag and de la
Cruz further suggest that the state seems to
have understood the
expectations of the growing industrial sector, and in consequence
President Medina Angarita
direction was
put into
at its disposal 60
Bs/$ at
that time)
created
a
Production
Council, whose
the hands of the private sector and had
million
Bolivars
for industrial
(Venezuelan
currency 3.30
and agricultural investment.
This was one of the first verifiable measures of direct financing
of industrialization
by the State. Sonntag and de la Cruz (1985)
also point out that
power
but
still
especially the
Venezuela's industrial
experienced
commercial
sector increased its
resistance
sector.
It
from
would
other
be
areas,
several years
before the industrial sector would become dominant.
The industrial
during
this
sector must be seen as a growing force which,
period,
was
becoming
more
clearly
defined
and
starting to make specific demands of the government.
2.1.2) The period 1945 -
During this
1958:
period we will observe how the industrial sector
was battling with the commercial sector to achieve
growing
importance
was
vital
in
the
attempt
hegemony. Its
to establish a
democratic government, with the common goal of fulfilling the job
requirements.
At
the
end
of
this
period we will observe how
political leaders as well as the industrial sector came together,
collaborating in the effort to launch Venezuela into a new era of
democratic government.
The struggle for hegemony:
1945 -
The Government of Medina
18,
1945,
and
replaced
1952.
Angarita was
by
a
military-civilian
President Romulo Betancourt.
During
middle-income
by
Democratica"
Bentancourt),
sectors,
(the
led
Social
foresaw
a
overthrown on October
this
military
Democratic
junta led by
political
officers
Party
founded
event, the
and "Accion
by Romulo
"political reappraisal of the National
Plan of the dominant class," which led towards "making industrial
development
its
goal,
even
when industrial activities did not
appear to be the most dynamic" (CENDES,
Researchers agree that
1945 was
Accion
mainly spurred
Democratica
perhaps Romulo
the
first
by the
(AD).
The
democratic
experiment of
middle classes and conducted by
leaders
of
that
movement, and
Betancourt more than any other, understood that a
re-arrangement to stabilize the
representative
1981).
democracy
government
requi red
a
and
move
redefinition
towards a
of economic
planning. The private sector was still at that time controlled by
the commercial
sector, and they remained indifferent, skeptical,
even
throughout
reticent
participated in
three-year
the conspiracy
1948 military coup and a
rise to
the
power composed
new
period,
that culminated
d ictatorship,
and finally
in the November
when
a triumvirate
by M. Perez Jimenez, C. Delgado Chalbaud
and Llovera Paez.
During these
process
of
three years
of the
democratic experiment, the
went
beyond the initial phase of
industrialization
implementation. This process was
of
rural-to-urban
experienced was
migration
primarily in
the same
type of
later by
the development
growth which
reinforced by
that
began
the acceleration
in
the production
1936.
The growth
of consumer goods,
would be recommended a few years
and industrialization
policies of the
Economic Council of Latin America (ECLA). Clearly this was a type
of
import
substitution
understanding of
industrialization.
For
a
better
the government's actions during this period, we
must review Betancourt's ideas.
Romulo
Betancourt,
leader
industrialization
and
satisfy
demand.
domestic
process would
AD,
of
agricultural
recognized
reform
Understanding
were
that
both
that
necessary
the
to
industrial
be a dependant to foreign capital with the implied
flight of national capital
and
the
national
for
him the most important issue was
contciousness,
obstacles
to
that industrialization would provide jobs. Also,
revenues
would
accelerate
the
relation to other developing
recognized the
he believed,
industrialization
countries.
Even
process
oil
in
though Betancourt
importance of the industrial process in progress,
this recognition was not enough to
mentioned before,
maintain AD
in power.
As we
the strong commercial sector ultimately joined
with the young military forces to conspire against
a partnership
developing a
whose strength
was impossible
democracy, in
for Betancourt and
Gallegos to overcome.
The
military
most
important
government
measure
was
the
taken
during
founding
of
the
the
civilianVenezuelan
Development Corporation (Corporacion Venezolana de Fomento - CVF)
in 1946.
Regardless of
important state entity
purpose
was
to
the political
financing
implement
regime, CVF
industrialization.
was the most
CVF's main
the industrial strategy conceived in
Betancourt's economic plans,
resources
from
the
providing
central
a
channel
government
to
of financial
the Industry. Such
economic plans envisaged four steps for industrial development:
First,
the
promotion
(principally energy)
of
and
basic
consumer
industries
goods
(import
substitution).
Second, the development of industries complementary
to the aforementioned.
Third, the developmnet of semi-heavy industry.
Fourth,
the
production
of
machinery
and
heavy
industry.
Of
the
149
Venezolana
allocated
de
million
Fomento
towards
represented
3.8
bolivars
(CVF)
in
financing
percent
of
handled
this
by
the Corporacion
period, 89 million were
industrial
projects.
the
National
Gross
This amount
Income, 2.26
percent of which was for promotion of industrialization. However,
CVF
was
not
the
only
entity
industrialization, others were
the
in
"Banco
charge
of
financing
Industrial"
and the
Ministry of Development itself.
The
financing
measures
protective tariff
and tax
this
State
period
the
described
above
relief policies.
began
to
were
flanked
by
In addition, during
participate more directly in
industrialization by investing in various enterprises, a tendency
that was to continue throughout the years of the dictatorship and
10
intensify
with
the
advent
of
representative
democracy after
January 23, 1958.
The skepticism
and distrust of the private sector towards in
AD's economic plan contributed to shaping the events
of the next
several years. In November 1948 a coup d'etat preempted the model
of representative democracy built in 1945. Although with
regime
the
state
became
the new
more rigid, the ensuing authoritarian
government kept in motion the economic development plan
that had
been forming since the beginning of the 40's.
We
have
to
emphasize
again
between the dominant classes
and
land
ownership,
that
the existing antagonism
traditionally
with
an
related
insurgent
to commerce
class
promoting
industrialization. Because the state's acceptance of new national
objectives, proposed
by those
who were at the time committed to
the industrialization process, would signify a shift in resources
to
those
activities.
State
and industrialists encountered the
resistance of the other sectors: commerce and agriculture
proposed
industrial
plan.
precisely here: An attempted
leaders
of
stability
Accion
for
the
industrialization to
The
struggle
Democratica
government
(AD),
the
those who
offering
benefits
of
years
was
the civilian
as a factor of
the incipient
were able to undertake the task,
trying
plans,
sectors
traditional
those
rapprochement between
and the new industrialists
with
of
to the
11
to
develop
(commerce
their industrial
and
agriculture)
resisting change. The message was transmitted
the receptivity
was not
because other reforms
reform
and
Betancourt
seems that
enough to maintain AD in power, perhaps
such
various
but it
as
types
"oil
nationalization",
agrarian
of social reform announced by Romulo
compromised
the
possible
gains
of
the
industrialization process.
Although
the
Venezuelan
state became much more politically
rigid during the dictatorship
followed the
of Colonel
M. Perez
Jimenez that
AD government, it should not be assumed that it was
incapable of modernizing itself. In fact, the State progressed in
its
institutional
structure,
simultaneously
allowing
the
industrialization process to advance. It is mistaken in this case
to
equate
dictatorship
with
government had been rejected,
economic
but
the
stagnation:
wisdom
of
the
AD
its economic
goals remained clear.
The industrial plan in action: 1952 - 1958
The
several
Perez
Jimenez
Regional
industrialization.
manufacturing
increased from
the same
administration undertook the creation of
Development
As
sector
a
to
the
Banks
result,
Gross
the
to
promote
contribution
Industrial
Product
private
of
the
(GIP)
58.7 per cent in 1950 to 60.3 percent in 1957. At
time there
was a decrease of
from 38.1 percent to a 34.5 percent.
the construction sector
During
this
six-year
manufacturing
surpassed
industrialists
were
in
cumulated
investments
gaining
more
The
more power, particulary
and
intensive, increasingly dependent on
had a
commerce.
in
groups were investing
The industrialization process was capital
industry.
machinery, and
investments
in
international interest
since at this time
heavily
period
the
relatively high
import
of
inputs and
degree of oligopolization
and monopolization.
At the end of these six-years the State initiated a
State
such
capitalism;
a
plan
reserved
development of Venezuela's natural
resources,
iron,
steel,
for
the
plan for
State
the
resources, especially mineral
petrochemicals
and the hydro-electric
power from the Caroni river in the Guayana region.
2.2) The period 1958 - 1973:
Rise and
decline of
the political
pact.
This
period
extends
government in January 1958
oil shock)
in 1973.
from
the installation of a democratic
until the
rise of
oil prices (first
The new government led by Romulo Betancourt
promoted the use of the Import Substitution and Tariff Protection
policies
in
the
national
their capabilities at
the
industries. These policies exhausted
end
of
this
period,
but
then the
government had at its disposal large financial resources steaming
from the first oil boom that
postponed
date.
13
the
crisis
to
a later
This
saw
period
two
AD
consecutive
governments and a final COPEI (Christian
The
two
first
COPEI
the
power thanks
arrived to
democratic)
democratic) government.
suffered from political instability
governments
that ended during
(Social
this
government;
to divisions
last government
within AD just before the
1968 elections.
The political pact.
On January 23, 1958, the dictatorship of Marcos Perez Jimenez
was
defeated
and
replaced
promised to establish
private sector,
a
a civilian-military junta which
by
representative
guided by
democratic
and all the party
the industrialists
leaders, came together to launch a second democratic
main
party
AD
was
secure
industrial class. The
in
process
the
approval
culminated,
regime. The
regime; the
of the insurgent
towards
the
end of
1957, in a meeting in New York, where capitalists and politicians
established a pact. Petroleum-based
and international industrial
capital quickly sealed the alliance.
Three
summarize
documents
sectors:
(1)
Principles
and
The
"Punto
Minimum
the
Fijo"
Program
pact
Pact,
of
between the different
(2)
The
Government"
"Statement of
and
Constitution of 1961.
In the 'Minimum Program of Government' all
parties agreed on a model of development which
gave the State the responsibility for economic
planning, development of infrastructure, the
pursuit of full employment, public housing for
the
poor,
and continuing improvements in
14
(3)
the
health, education and social security. The
for
the
call
not
did
constitution
nationalization of the oil companies or other
developers of Venezuelan natural resources; it
called instead for a limitation on further
concessions and for greater participation in
income. In addition it promised protection of
domestic industry against foreign competition,
and the support of domestic industry through a
development corporation.(Scott, 1986)
Democracy and the Economic Plans:
The
young
democracy
international
would
The
corporations.
for retaining
established called
which
be
diversification
a decline in oil investments by
faced
achieved
and
development
to
be
the historical rate of growth,
through
through
plan
industrial
substantial
development
and
new exports (Ganz and
Blanco, 1969).
In addition, there was
employment
opportunities,
percent of the Gross
cent of
an
urgent
since
need
for
petroleum
National Product
new productive
accounted
but supported
for
25
only 2 per
the nation's employment. Venezuela was thus experiencing
the paradox of
high
unemployment
in
the
midst
of
a booming
economy.
The Plans
of 1963-1966
and 1965-1968
set ambitious targets
for economic growth, with fundamental changes in the structure of
production
and
employment
(Sonntag
and
de
Production of goods and services were to rise
la
at an
Cruz,
1985).
annual rate
of 7 per cent. Industrialization was to provide the main elements
15
for growth in
and net
to
production,
productive
employment opportunities,
savings for investment. Public investments were expected
continue
to
support
two
fifths
of
the
total industrial
development.
There
investment
were
to
be
policy:
(Corporacion
two
The
Venezolana
main beneficiaries of this national
Venezuelan
de
Fomento,
Development Corporation (Corporacion
CVG). The
former (CVF),
was to
policy of import- substitution
development of
new a
Development
or
CVF)
Venezolana
be responsible
and
the
industrial center
latter
Corporation
and the Guayana
de
Guayana, or
for following a
(CVG),
for the
to produce enriched and
pre-reduced iron ore, metals, chemicals, and metal fabrications.
The subsidies promised
(1957)
to
the
private
sector came
through the Corporacion Venezolana de Fomento. As was noticed, in
discussion of the previous period (1945-58),
charge
of
implementing
the
industrial
financial resources for new enterprises and
that implied a high
The Industrial
this office
strategy,
was in
providing
coordinating tariffs
level of protection to industry.
State and
the role of the Corporacion Venezolana
de Guayana (CVG).
Romulo Bentancourt had achieved
launching
the
new
democratic
the necessary
regime;
measured the possible consequences
of
however,
the
consensus for
this
time he
aggressive petroleum
the past. It is probable that the Government that he
policies of
one he had
envisioned required a "leit motif" different from the
postulated
a
oil
be provided by
motif" would
necessary "leit
exploitation. This
of
control
the
was
which
before,
decade
the development of the natural resources of the Guayana region as
a national enterprise.
The Guayana project was conceived as an integral
Plan, created to help achieve national goals
Venezuelan National
through the development of
construction
of
part of the
a
city
industry and
in
power, and
through the
what was virtually an empty space.
(Ganz and Blanco, 1969: 69).
The economic plans of the
industries
would
make
earnings by 1980. An
expected to
1965
1960's
one-fourth
important
come from
already
up
early
of
portion
of
predicted
that new
Venezuela's exchange
these
earnings was
the Guayana region. This region, which in
accounted
for
7.5
per
cent
of
Venezuela's
manufacturing production,
was counted on to provide one fifth of
Venezuelan
output
manufacturing
and
almost
a
fourth
of
an
expanded level of exports by 1980.
To accomplish such targets, the National Plans ("Planes de la
Nacion")
of the early 60's called for 10 per cent of the nation's
investments, public
and private,
to be
devoted to the Guayana-
region program in the period 1963-1966. The Guayana
share of the
national investment was substantially greater than 10 per cent in
certain priority areas: 14 per cent
and petroleum,
21 per
of the
investment in mining
cent in manufacturing, and 34 per cent in
electric power.
The main objective of
the basis
of the
the Guayana
national economy.
project was
This new
to transform
economy was to be
based on heavy industry and power.
In the context of the resources available in
the Guayana region, and taking the specific
needs of and targets for the Venezuelan economy
set down in the national plan, the planners
designed a heavy industry complex with specific
targets and programs for the production of
steel,
enriched
iron
ore,
sponge iron,
aluminum, chemicals, pulp and paper, metal
fabrications, and electric power. The short
term (1965-1968) and the long term (to 1980)
regional development program was formulated
around this heavy industry complex. From the
beginning the major considerations in project
selection included (1) modern technology that
was related to Guayana's unique resources, (2)
domestic and export demand, (3) economic scale
to achieve competitive output and pricing, (4)
integration
and
complementation
with the
Venezuelan economy as a whole, and (5) linkages, external economies, and transportation factors.(Ganz and Blanco, 1969: 66).
The Guayana industrialization plan
of
iron
ore
to
primary targets.
aluminum
and
established the upgrading
enriched
iron
ore, sponge iron, and steel as
Following
this
would
pulp.
These
latter
coordinated with the development
be
areas,
of
the
development of
however,
electric
power
had
to be
and forest
reserves respectively. Production of ammonia could take advantage
of the availability of
nearby natural
gas. Later
on, the metal
fabricating
industry
could
be
linked
to
iron
and
steel
development.
As we
have noted,
Democratica;
during
the Guayana-CVG
was a
Betancourt's government,
project of Accion
AD started Guayana
City, initiated the steel factory and constructed the bridge over
the Orinoco
river. When the COPEI party came into power in 1968,
their leaders put a freeze on the development project.
Basically,
they reduced the budget of CVG, while at the same time increasing
the budget for all the public enterprises controlled by CVG, such
as EDELCA,
the company in charge of the Caroni river development
(see table 2.1). COPEI created a new platform for the development
of the
Guayana region
from the
Ministry of Public Works (MOP).
This new program was called "La conquista del
of
the
South).
Industrial Plan
The
COPEI
into an
government
Sur"
thus
(the Conquest
converted
infrastructure program
an
AD
for the Guayana
region.
In the
last five years of the period, between 1958-1973, and
during the COPEI government of 1968-1973,
the import substitution
policies originated in 1961 finally exhausted their capabilities.
This
was
evidenced
manufacturing
by
industry.
experienced the first
a
decrease
At
the
in
annual
growth
in
same time, in 1972, oil prices
major increase.
(see GNP table 2.2).
2.3) The period 1973 - 1983: Political Economy of Petrodollars.
TABLE 2.1
:
COPPORACION VENEZOLANA DE GUAYANA
M
BUGET 1965 -
1976
( IN MILLION BOLIVAPS )
% OF TOTAL
NATIONAL
INVESTMENT
INSTITUT
CVG
EDELCA
-----------------------------------------------------------------70.0
86.9
NA
1965
70.0
62.5
NA
1966
90.0
124.9
1,306.0
1967
30.0
124.3
1,:388.7
1960
45.4
122.9
1,494.1
1969
5.0
128.7
1,306.5
1970
33.0
74.0
1,819.2
1971
30.5
70.0
1,494.8
1972
50.0
58.0
1,517.5
1973
INVESTMENT
SIDOR Subtotal FROM THE
INV INSTITUT
103.1
169.5
90.0
90.0
25.0
NA
34.0
40.0
40.0
260.0
:302.0
294.9
234.3
193.3
133.7
141.0
140.5
148.0
NA
19-00%
16.00%
13.00%
10.00%
9.00%
9.00%
10.00%
19.00%
997.2
598.8
130.5
267.9
5,122.0
1974
28.00%
840.0 1,175.1
24.6
310.5
4,248.1
1975
11.00%
400.0
NA
NA
400.0
1976 (Ley) 3,489.7
-------------------------------------------------------------Total
1,777.9
601.9
1,970.3
4,350.1
16.00%(b)
4,787.1
23,186.6 (b)
------------------------------------------------------------Including : "modificacion a la ley de presupuesto".
(a)
Including 1967-1976 period
(b)
SOURCES: Ministerio de Hacienda, Direccion Nacional de Presupuesto.
en: Izaguirre, Maritza. "Cuidad Guayana y la estrategia
de desarrollo polarizado". Ed SIAP-Planteos
Table 36. Pg 90.
TABLE 2.2 : GROSS DOEsTIC PRODUCT AT MARKET PRICES BY SECTOR 1970-1983
Cbillions of bs st 1968 prices) (1).
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
~-----------------~--------------- ---------~-----------------------------------------------------------------------------------------------------72.5
76.1
75.6
75.8
7?.4
76.4
74.8
70.1
64.4
60.7
57.3
53.9
52.1
50.7
TOTAL GOP
-4.738
0.66R
-0.26%
-2.07%
1.31%
2.14Z
6.70%
8.85%
6.10%
5.93%
6.312
3.45%
2.762
------------------------------------------------------------------------------------------------- ---------------------------- ---------5.9
6.1
6.6
6.8
7.4
6.9
7
7.2
7.1
9.1
10.3
9.7
10.6
11.2
Petroleuw
-3.28%
-7.582
-2.94%
-8.11%
7.25%
-1.43%
-2.78%
1.41%
-21.982
6.193 -11.652
-8.492
-5.362
---------------------------------------------------------------------------------------------------- ------------------- --------------70
66.6
69
69
70
69.5
67.8
62.9
57.3
51.6
47
44.2
41.5
39.5
Nonpetroleuw
-4.86%
1.45%
0.00%
-1.432
0.72X
2.512
7.79X
9.77%
11.052
9.792
6.33%
6.51%
5.06%
-------------------------------------------------------------------------------------------------------------------------------------------PRIMRRY SECTOR
Agriculture
Crude petroleuw
Mining
SECONDRRY SECTOR
Manufacturing
Petroleum refining
Electricity and mater
Construction
TERCIRRY SECTOR
Comerce
Tranport and cow
Financial inst
Governwnet
Other services
Subtotal
Less imputed
9.8
10.1
10.6
10.9
11.2
10.5
10.5
10.5
10.8
12.2
12.7
12
12.9
-2.97Z
-4.72%
-2.75Z
-2.682
6.67R
0.002
0.00%
-2.78%
5.83% -3.94% -11.48X
-6.98
-2.27%
4.9
4.8
4.7
4.8
4.7
4.5
4.4
4.1
4.2
4
3.7
3.5
3.6
3.5
2.08
2.13%
-2.08%
2.132
4.44%
2.27%
7.32%
5.00% -2.38%
8.11%
5.71F
-2.78%
2.86%
4.5
4.8
5.3
5.5
5.9
5.4
5.5
5.7
5.8
7.3
8.3
7.9
8.7
9.1
-6.252
-9.432
-3.64%
9.26% -6.782
-1.82%
-3.51%
-1.72%
5.062 -12.05% -20.55%
-9.20%
-4.402
0.4
0.5
0.6
0.6
0.6
0.6
0.6
0.7
0.8
0.9
0.7
0.6
0.6
0.6
0.00% -16.67% -20.002
0.00%
0.00%
0.002
-12.50% -14.29
16.67% 28.57% -11.11
0.00%
0.00%
-------------------------------------------------------------------------------------------------------------------------------------------20
20.4
20.1
20.3
20.8
20.7
19.5
17.9
15.8
14.5
13.9
12.8
11.6
11.1
-1.962
1.492
-0.99%
-2.40%
0.482
6.15%
8.94%
13.292
8.972
4.32;
8.592
10.34Z
4.50%
12.3
12
12.5
12.3
11.9
11.4
10.8
10.4
9.3
8.3
7.6
7.2
6.6
6.2
-1.60%
4.172
3.36% -2.44%
4.392
5.56d
3.85a
11.832
12.05%
9.21P
5.562
9.092
6.452
1.4
1.3
1.3
1.4
1.5
1.5
1.5
1.5
1.3
1.8
2
1.8
1.9
2
7.69%
0.00%
-7.14a
0.00% -6.67
0.002
0.00%
15.38%
11.112 -10.00% -27.78Z
-5.26Z
-5.002
2.7
2.5
2.3
2
1.9
1.7
1.7
1.6
1.5
1.3
1
1.1
0.9
0.9
8.00%
8.70%
15.002
5.262
11.76%
0.00%
6.25%
6.67%
15.382
18.18%
10.00%
11.11Z
0.00%
3.6
4.1
4.5
4.6
5.5
6.1
5.5
4.4
3.7
3.1
3.2
2.8
2.2
2
-8.89% -12.202
-2.17%
-9.84% -16.362
10.91%
25.002
18.922
19.352
-3.13N
14.292
27.27%
10.00%
-----------------------------------------------------------------------------------------------------------------------------------48
46.1
48.3
46.9
48.3
48.3
47.4
43.6
39.3
34.7
31.1
29.4
27.3
25.7
-3.96R
-0.62%
2.992
-2.90%
0.00%
1.902
8.72%
10.942
13.26Z
11.58%
5.78%
7.692
6.23Z
6.8
6.9
6.7
6.9
8.2
8.7
8.7
8.3
7.4
6.4
5.9
5.7
5.5
5.4
-1.45%
2.99%
-2.90%
-5.?5% -15.859
0.002
4.82%
12.16v
15.63X
8.47P
3.51%
3.642
1.85%
8.8
10.5
10.2
9.8
9.9
10.4
9.6
8.7
7.7
7
6.3
6.1
5.5
5.2
2.942 -16.192
4.082
-1.012
-4.81%
8.332
10.34M
12.992
10.00%
11.11%
3.28%
10.91M
5.77%
15
14.6
15.1
14
14.5
14.3
14.2
13.1
11.7
9
10
8.3
7.7
7.2
2.742
-3.312
7.862
-3.45%
2.112
-0.702
9.16a
11.972
17.00%
8.43% 11.11%
7.792
6.942
10.4
10.6
10.6
10.5
10.1
9.4
9.3
8.6
7.9
7.2
6.2
6
5.5
5.1
-1.89%
0.002
0.952
3.962
7.45%
1.08%
8.142
8.862
9.72%
16.131
3.332
9.09%
7.84%
5.1
5.4
5.7
5.7
5.6
5.6
5.5
4.9
4.6
4.1
3.7
3.3
3.1
2.8
-5.562
-5.26%
0.002
1.792
0.002
1.822
12.249
6.52%
12.20%
10.81P
12.12%
6.45
10.712
13.2
50
1
bank charges
51.8
3.602
1
0.00%
54.2
4.63%
1.3
30.00%
57.7
6.46%
1.6
23.082
61.4
6.41P
2
25.00%
65.9
7.332
3.3
65.00%
72
9.26%
3.8
15.15%
77.4
7.50%
4.7
23.68M
79.5
2.712
4.8
2.132
1.?
2.1
2
1.9
1
1.5
1.1
1.3
5.00% -19.05%
5.26X
26.672
50.002
-9.09V
-13.332 -15.382
------------------------------ ------------------------------------------------------------------------ -------14,071
13,590
13,119
12,665
11,632
Population (2).
3.54%
3.59X
3.582
8.882
--------------------------------------- ---------------------------------- ------------------------------(1) Source: Scott-Venezuela 1986 adapted frow Banco Central de Venezuela
(2) Source: Minister9 of Energy and Mines.
Plus custows duties
1.5
80.3
1.01%
5.2
8.33%
78.1
-2.742
4.8
-7.692
79
1.15%
5.7
18.752
78.5
-0.63%
4.9
-14.04Z
75.9
-3.31%
4.8
-2.042
1.3
2.3
2.3
2.6
2.4
0.002 -43.482
8.33X -11.54%
41.18%
-------------- -----------------------------16,394
15,940
15,485
15,024
14,562
2.852
2.942
3.07X
3.24X
3.42%
---------------------------------------
brought into power someone with the will to
of 1973
in December
to the Presidency
of AD
The election of Carlos Andres Perez
government, thanks to
innovate, delegate and spend. The now-rich
the rising oil prices of the early 70's, purchased the iron mines
also provided
Venezuela's
concessions. It
the oil
from their foreign owners, and likewise
for a vastly expanded effort to develop
the funds
resource-based
industries
("La
Gran
Venezuela",
launched by Perez), all through state-owned corporations.
on the Venezuelan economy in
an impact
bonanza had
The oil
two waves, 1974 and 1980, which should be differentiated one from
the other.
Guayana
The first
program
investments),
(see
and
in
and the SIDOR steel
decade. The
and decisive
graph
owned bauxite
indicating
the
jump
in CVG
consequence the hydro-electrical Guri dam
plant were
aluminum smelter
to 250,000 tons. New projects
million ton
2.1
wave was channelled into the
brought forward
by more
than a
of Venalum was raised from 100,000
were
announced,
among
them
a 1
state-owned alumina plant and a 3 million ton statemine. Investments
in pulp,
diesel motors, cement
and gold were discussed. The original 1965 projection for 1980 of
transforming the Guayana complex,
substituting imports
during
those
only
into
years
become
were
a
reality.
alumina,
as
center for
well
as
The decisions
based on projected exports of 3
million tons of steel, 200,000 tons of aluminum
of
a
of key industrial products, but also into a
major export center could now
made
not
and 350,000 tons
many other products. Cement was to be
20
GRAPH 2.1
-5-197 i'
CV G 19
BUDGETS
$1 .200
$1.100
$1.900
$o.aoa
$0.700
$o.ano
$B13MI0
.40. 0
$$0.;50a
-
$0.210
~V4
*
1.2513
1.9890
4-
CvG
-9Eddan
9-now
1.872
1.97
A Sidar
I
-'
1.874
X
1.078
subintal
TOTAL INVESTMENT AND CVG
SHARE OF TOT4L-
(19.".-1976)
C/G
D.CvD
dd to-tal
1871
1
int invearmtitn
4
1G75
Tat d I n - CvX
provided for the construction of the Guri dam
light the
whole central
area of
and electricity to
the country. The main question
which arises from these projects and projections is, what has the
return
of
these
been,
investments
and
what
is their actual
contribution to exports today?
2.4) The period 1983 - 1987: Crisis and devaluation.
took place
at this
three major
due to
This period is significant
Venezuela: the first devaluation of
time in
elections in December
the Bolivar in February 1983, presidential
1983
(which
were
won
by
events which
AD), and a second devaluation of the
bolivar in December 1986, when additional
exchange controls were
introduced.
The Venezuelan
economy during this period remained stagnant,
as the GNP did not grow
announced that
year). The
after
the non-oil
crisis
of
this
1980
(in
December
1986
it was
sector grew 3.5 per cent during that
period
is
partially
explained by
reduced private investment and flight of capital, consequences of
a lack of confidence in the
economy, higher
interest in foreign
capital markets (1980-82) and the overvaluation of the Venezuelan
currency (until December 1986).
Venezuelan unemployment is now
(the Central
Bank puts
the
highest
in
forty years
the figure at 12 per cent and the unions
argue that it is around 20 per cent), and inflation
is also into
double
digits.
These
figures
are
surprising after the annual
growth experienced from the early 50's
Venezuela was
until the
seen as one of the few economic success stories in
Latin America. This state of affairs is not
of
the
involves
economic
the
recession
very
development both
responsible
mid-70's, when
it
viability
only serious because
entails,
but
of
country's
the
also
because it
scheme
of
political and economic. Venezuela's leaders are
for
having
set
over-ambitious
targets
and
miscalculated their implementation, and it is the Guayana project
which cast a shadow over these figures.
The drop in oil
prices
Venezuela's economic
earlier,
economy,
rather
than
actually
appears
to
as the
the second oil price
to
a
large
extent to
crisis, but this crisis appears to have had
its origins much
referred to
contributed
oil
have
involving
alone.
begun
most
if
not
Paradoxically,
in
1978,
all
the
during
of the
decline
the period
"oil bonanza", and to have continued despite
rise;
the
fall
of
oil
prices
has only
accelerated the process.
It is
important to
note the
the period prior to 1973, when
strong economic performance in
non-oil growth
was 6.5
per cent
per year in comparison to the period 1973-84, when it grew only 3
per cent. Examining these figures since 1978, we
have a
1.1 per
cent annual
growth. It
income grew
more than 3 per cent prior to 1973, and rose briefly
is important
22
to note
as well that real
upwards from 1973 to 1977, only to sink in 1985 to lower than the
1973 levels. Private
between 1977
sector
and 1982.
investment
went
off
75
per cent
The creation of jobs, which had averaged
about 150,000 per year in the 70's, fell
sharply in
1978 and by
1983 was negative.
The private sector, with a utilized capacity of around 60 per
cent, since the first evaluation was
to overcome
the crisis.
strategy. These
groups
demanding changes
Some private
asserted
in order
groups had proposed a new
that
if
Venezuela
wished to
regain its forward momentum, the government would have to abandon
its strategy
of import
substitution based
on the
State as the
engine of growth, in favor of a strategy which relied more on the
private sector, to achieve a more
diversified group
of exports,
notably manufactured exports. These initiatives are embodied in a
book, Proposal to the Nation (E. Quintero and
others, 1985): the
proposed initiatives were to be supported by a sharp devaluation,
as well as reduction
in protection
industry,
a
"to
open
way
for
and control
the
creation
competitive activities in manufacturing"
The recent
January 1986),
debt,
and
deterioration
the efforts
the
preferential rate
high
of
for
of new, export-
(Scott, 1986).
prices
made since
demand
of 7.50
oil
of the domestic
(especially since
1983 to
foreign
pay off foreign
currency
at
the
Bolivars per US dollar established in
1983, combined to put enough pressure on the
balance of payments
to motivate
a new
economic strategy and a second devaluation of
the Bolivar in December 1986. A
per
US
dollar
was
established
goods and services, with
remains
unchanged
new exchange
all
Bs. 14.50
for all imports and exports of
some exceptions.
for
rate of
imports
(The Bs.
7.50/$ rate
and exports of the oil and
iron-ore industries).
This new exchange rate was
order
to
reduce
its
supported
by
other
measures in
effect on national investment, mainly the
foreign investment regulations which had been relaxed in order to
promote
future
foreign
exchange
investors clear-cut
guidelines on
accorded
investments
to
their
contracts.
The new laws gave
the exchange
and
treatment to be
the remission of dividends
abroad.
At the same time, in order to stimulate domestic investments,
the
Venezuelan
Development
Fund
Venezuela")
had announced that
investment
projects
through
it
("El
Fondo de Inversiones de
would
finance certain private
shareholder participation in mixed
enterprises, and open overall lines of
and
development
agriculture,
of
specific
industry,
and
of
most
credit for
high-priority
construction
the financing
sectors
of
such
as
tourist
infrastructure.
The
effects
implementation
of
the
some
recent
measures
devaluation
which
were
and
the
announced
simultaneously
are
a
source
of current debate. Pedro Palma, a
Venezuelan economist, gave a presentation to the Mason Fellows at
Harvard
University
(Kennedy School
1987 about the short term effects
In
his
opinion,
exporters and
the
reduce
of such
devaluation
those
of
of Government) on March 14
a second devaluation.
would "generate earnings for
importers".
In
Venezuela, the
principal exporter by far is the public sector, while the private
sector is
basically a
that the
net importer.
recent measures
Palma's estimate indicates
would add approximately Bs. 35 billion
to the Central Government (principally originating
profits).
The
situation, the
from
private
private
sector
new exchange
exports
and
would
face
rate reducing
increasing
a
from exchange
more
difficult
the bolivar earnings
the
cost of imports and
foreign debt service.
In Palma's national accounts, he forecasts a positive balance
of 9,896
billion bolivars
for the
balance for the private sector of
public sector and a negative
35,295 billion
bolivars. Even
if the government is capable of returning a large portion of this
transfer
to
government
the
has
private
at
its
sector,
disposal
while
only
estimating
of Bs.
25 billion.
In order
loss of
income on
to continue stimulating
public spending in the internal economy at the levels of
previous years
sector,
the
the
9.9 billion bolivars to
invest, the private sector will undergo a net
the order
that
the two
and to compensate for the transfers to the public
Government
must
provide
some
additional
Bs. 20
billion or more. Such resources will have to come from new credit
sources in an amount equivalent to
the country's
pnlblic foreign
debt service outlays.
It
is
national
in
this
role
to
administration
of
perspective
play.
CVG,
The
Guayana
is being
investment and reactivation of
in attracting
that the Guayana project has a
foreign capital.
offered
the national
region,
as
a
under
the
channel
for
economy, especially
In chapter 3 we will observe why
these required new investments tend to keep going to Guayana, and
in chapter
4 we will see how CVG is facilitating these transfers
to the region.
3) THE OUTCOME OF THE INDUSTRIALIZATION PROCESS:
As we have seen in the preceding chapter, it has become clear
that
important
time, and new
economic
changes
are
strategies
growth.
consideration
must
These
the
taking
new
relative
government, state-owned
labor force. The study
Guayana Development
be
place in Venezuela at this
provided
strategies
positions
of
enterprises, the
of
in
the
order
must
the
to spur
take
main
into
players:
private sector and the
industries
associated
with the
Corporation can't be separated from analysis
of the role of the other players.
In this
Venezuelan
chapter I
have made
industrialization
a special
from
political point of view.
This would
economic
more
variables
are
main players
in the
economic
help us
important
Venezuelan industrialization and to
of the
an
effort to reexamine
rather
to determine which
for
weigh the
the
analysis
of
relative position
economic arena. Understanding which
are the more important economic variables will help
the relative
than a
us to define
position of the players and will allow us to make a
better assessment of this case.
We can easily recognize that
exporter since
the beginning
Venezuela
has
been
of the century (table 2.2 provides
information for 1970-83). Today, as it was 25 years ago
industrialization
process
and
a primary
when the
the Guayana project started,
the
economy is still
Venezuela been
highly
dependent
unable to
on
oil
exports.
reduce its dependence on oil revenues?
countries which
How has Venezuela performed in relation to other
were primary
Why has
exporters 25 years ago? How has Venezuela performed
in relation to other oil-exporters in the last decade?
Studying the experience
help
us
of
other
the
understand
industrialization process.
developing
deficiencies
For the
countries may
of
Venezuela's
"different
developing world,
factors seem to suggest a balanced investment in heavy as well as
light industry and a reduced share of manufactured imports in the
gross national product".
Venezuela, as
(Chenery,
we noted
industrialization
under
pg 2,
1986).
in Chapter
the
2, began
influence
of
its process of
specific
economic
theories. During the decade of the 50's Presbisch and Singer were
advocating industrialization
disadvantages
of
in
specialization
associated secular deterioration
order
in
in
to
offset
the supposed
primary production and the
the
terms
of
trade. This
ideology was based on two fundamental points: The clearly limited
world demand for
domestic demand
a
general
exports
of
primary
products
and
the rising
for manufactured goods. These realities promoted
import
substitution
strategy
among
Latin American
countries that called for a balanced growth of the industrial and
primary sectors.
Venezuela, like other Latin American countries,
import substitution
would
conflict
practiced an
policy. It can be argued that such a policy
the
with
neoclassical
concept
of comparative
advantages, which suggests that Venezuelan advantages were in the
oil industry (World Bank
industries
as
suggested
report
of
after
the
1961)
or
appraisal
region. This economic concept
of comparative
progressive appraisal
natural resource
Guayana region has
of the
been
in
tremendously
iron related
of
the Guayana
advantages and the
endowment of the
influential
among policy
makers during the entire democratic period.
Referring
again
to
economic
industrial process must
take
into
natural
resources
available,
capital
resources
in
manufactured
goods,
order
but
or
to
also
theory,
any evaluation of an
consideration
the
not
allocation
exploit
them
or
only the
of human and
to
produce
the global changes in demand and
supply as ways of guaranteeing transfers of modern technology.
In addition, trade policies
factor of
economic growth
have proved
among the
to be
more successful developing
countries. Venezuela can't escape the temptation
these successful
have
have
arisen
of referring to
countries to reexamine its industrial strategy.
What Venezuela must keep in
economies
an important
faced
from
international economy
a
mind
is
that
these trade-oriented
completely different world economy and
different
historical
those countries
29
backgrounds.
dealt with
The
in the period
1950-70 was a world
of expansive
international trade. Venezuela
today faces a radically altered world, one where restrictions and
protectionism are the order
years the
US and
of the
Spain have
day. For
example, in recent
imposed a voluntary steel quota on
Venezuela.
The argument
for
shifting
from
an
inward-oriented
to an
outward-oriented strategy has been strengthened by the success of
a small group of
by the
"newly industrialized
four East
Asian economies
economies", particularly
in this group: Hong Kong, the
Republic of Korea, Singapore, and Taiwan.
Although
these
successful
outward-oriented
policies
have
received great attention in recent years, they have been only one
of
several
Japan for
ingredients
example has
in
Venezuela
because it
development strategies.
been more
notable for
attaining a great
than
having
particularly open
increase in productivity
economy (the
successful
for
a
"microchips-war" in March 1987 is
is
different
owns this
from
these
a clear example).
successful super-exporters
natural resource
endowment which includes
oil, iron ore, cheap energy, gas and others. The general tendency
of
countries
such
endowments
and
strategies
of
as
primarydelayed
Venezuela,
exporter
which
have
large
economies,
industrialization,
where,
start, manufacturing increases rapidly in response
of domestic
demand. It
is important
is
resource
to
follow
after a late
to the growth
to notice that at the same
time Venezuela has the
resources.
The
power
timing
to
and
decide
scale
when
of
to
such
developments would be a fundamental issue in the
general development
in the hands of
develop such
resource
base
analysis of the
and industrialization of Venezuela. What was
international corporations
two decades
ago, is
today in hands of many independent producers such as Venezuela.
In addition
to natural
important factors such as
resource endowments and trade, other
the role
of the
Government and human
resources have also to be considered in evaluating the actual and
future capabilities of the Venezuelan economy.
We would expect Venezuela, like any other developing economy,
to
experience
process
of
evaluating
relative
structural
changes
industrialization.
the
industrial
contribution
However, using
of
a broader
In
in
its
a
process,
different
economy
neoclassical
during the
approach to
we would only focus in the
sectors
perspective, should
account the failure to reallocate resources
to
total growth.
further take into
efficiently in order
to increase exports or replace imports.
STRUCTURAL TRANSFORMATION:
Structural
not
only
demographic
transformation
changes
in
analysis takes into consideration
agriculture,
transformation,
but
industrialization
also
incorporates
and
the
transformation of demand, trade, production and employment into a
single framework.
among
sectors
adjustments
theory.
The structural approach focuses oA differences
of
in
the
resource
Neoclassical
maintained
over
is
time,
a
which
allocation
theory
factors on the supply
Venezuela
economy
which
limits
example
inhibit equilibrium
as implied by neoclassical
assumes
side. The
good
may
that
the
equilibrium
sources of growth to
evidence seems
of
the
is
to suggest that
failure
efficient allocation of resources as implied
to
achieve an
by the neoclassical
theory.
In an equilibrium growth perspective as suggested by Chenery,
competitive
equilibria
that
underline
neoclassical theory are a convenient starting
point for growth analysis because they permit
any group of inputs to be aggregate on the
basis of their marginal productivity (Chenery,
1986: 16).
In
equilibrium
growth
theory,
all
primary
inputs
are
categorized as either capital or labor. Each of these can then be
consolidated on the basis of its share in the total
difference between
the growth
of total
average growth of capital and labor
increase in
product. The
output and the weighted
serves as
a measure
of the
Total Factor Productivity (TFP) for the economy as a
whole.
Comparative studies designed
capital,
labor
and
to
productivity,
several economies, including
measure
have
Venezuela.
32
been
These
the
importance of
carried
out for
studies indicate
that
the
growth
of
capital,
labor,
and
comparable importance for the whole, but
the structure
productivity are of
vary significantly with
of a specific economy and the effectiveness of its
policies.
In his
analyzed
comparative
the
study
different
for different
different
contributions
growth of outputs, inputs,
and elaborated
of
and Total
to
economies, Chenery
growth; analyzed the
Factor Productivity (TFP);
a table from which I extracted the averages given
groups
of
countries:
developed,
developing and
centrally planned economies. We can compare these values with the
Venezuelan figures.
Table 3.1
The Growth of Output, Inputs, and Total Factor Productivity.
TFP
Economy
Years
Growth
value
added
(Gv)
Developed
Centrally planned
Developing
Venezuela 50-60
60-74
Total Factor
input
5.4
8.2
6.3
7.85
5.1
Growth Growth
Growth share Growth share of
of
rate
rate
capital labor
(Ga)
(Gf)
(Gk)
(Gl)
2.7
2.5
2.0
2.15
0.6
49.0
35.0
31.0
27.4
11.8
2.7
5.7
4.3
5.7
4.4
51.0
65.0
69.0
72.6
88.2
5.2
8.0
5.5
7.2
4.5
1.1
4.5
3.3
3.7
3.3
Source: Extracted from Chenery, table 2-2, (1986).
From
the
averages
given,
developed
economies
are
characterized by the small growth of labor inputs (1.1 per cent),
moderate growth
cent),
and
of capital
a relatively
(5.2 per
cent) and
large contribution
33
output (5.4 per
of TFP to aggregate
growth (50 per cent). The developing economies, in contrast, have
a
high
growth
of
labor
inputs (3.3 per cent), a higher total
factor growth (4.3 per cent) and a relatively
of Total
Factor Productivity
(TFP) to
small contribution
aggregate growth (30 per
cent).
The
Venezuelan
position between
experience
is
the countries
remarkable
in
studied. Figure
relationship between total factor
its relative
(3.1) shows the
productivity growth
and total
factor input growth. We see here that the developed countries fit
within a smaller
growth
,
cluster,
with TFP
A,
defined
relative
low factor
accounting for between 50% and 70% of overall
growth. Developing countries are
large one
by
divided into
two clusters: the
, B is characterized by TFP growth between 0.5 and 2.0
percent. The smaller
economies plus
one,
C,
is
composed
of
five developing
Japan, with aggregate growth (Gv) of more than 10
per cent. (See Figure 3.1). Venezuela stands with
a total growth
of 5.1 per cent, where such growth was basically spurred by total
factor input
growth (4.4
contribution to
per cent),
total growth
and where
increase of TFP
was practically insignificant (0.6
per cent).
Grouping the countries in those categories
and performing
mentioned before,
a regression analysis, we arrive at Figure (3.2).
It is interesting to note that both sets of regressions
the relative
point to
inefficiency of the growth processes of the typical
34
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&4t.OvPrl+ *MP rOr*L. Foca-m
imP\r fr*OSwri*.
I
I
to
7
7
tOrAlL. froTort INPT 4ftoIwflo (.Y
SOur'* UC MCCY~ AMP OMS~r. 'O1t4PO&TVRJA
TTiOP
-AMP
developing country in cluster B (where Venezuela stands
of
the
lowest
functions
productivity
represented
economy with
in
rates). In terms of the production
Figure
relatively high
can expect aggregate growth
countries or
with one
(3.2)
a
factor input
of
6
efficient economies
per
typical
developing
growth of 5 per cent
cent,
whereas developed
predict growth
of about 9 per
cent.
The question that immediately
such
inefficiencies
in
the
arises is,
Venezuelan
important increase in its total factor
Venezuelan
economy
increase
how do
we explain
economy? Having had an
input growth,
why didn't
proportionally? Equilibrium growth
can't explain this imbalance.
Several factors suggest the
effects of
disequilibrium into
importance of
the study of Venezuela's growth.
The structural variables we should look
rates are:
(1) Reallocation
incorporating the
to in
explaining growth
of labor and capital; (2) Growth of
exports; (3) Capital inflows; and, (4) Level of
development. It
would seem that one of these variables, or a combination of them,
can help us to explain Venezuela's disappointing performance.
The structural transformation approach used by researchers to
evaluate the
performance of a specific economy proposes studying
the structural transformations of
This approach
provides both
an economy
the aggregate
in a
time series.
data available for a
W.A1-ONrT llJPS B&ThICSM VhU'.'S APe
PFmr.TtDx iNevr avitotorO.
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t
7000
S% Pmz~r,1000"OOOO ALL DILOP
g
L>
r0000
L
Foil
le'LLJT~
(~~pI&~
>4o
±
2
3
4
PICTOK
5
(
7
(/.
lNpLtrI* Rowtt
large
number
of
countries
and
the
detailed
time
series of
individual countries.
We can
define the structure of an economy by its supplies of
productive factors - labor, capital and natural resources
their
employment
in
different
-
and
sectors. We can then define the
structural transformation of a developing country as,
the set of changes in the composition of
demand, trade, production, and factor use that
takes place as the per capita income increases.
A main thesis is that to understand country
differences in sources and rates of growth ,
the transformation as a whole must be analyzed.
More specifically, changes in demand and trade
may affect the sources of growth as much as the
changes in factor supply (Chenery, 1986: 32).
Cross-country
studies
between
developing
and
developed
countries yield two general results: First, they identify several
aspects of structural changes that affect the rate
that
have
development.
country
a
varying
Secondly,
regressions
importance
the
are
at
structural
all
more
of growth and
different
factors
significant
in
levels
of
the cross-
for developing
countries than for developed ones. Investment is the
only source
of growth shown to be important for both groups.
In
order
to
compare
different
colleagues have proposed to
by
sectors
first
and
then
break down
countries, Chenery and his
the supply-side analysis
to combine it with a corresponding
breakdown of demand and trade. The result is a demand
side view
of the
factors leading
consistent
to structural
change and growth that is
with the supply-side analysis.
An analysis of the Venezuelan economic structure and the role
of
the
Guayana
regional
require the use of
inter-
industry
economy
input-output
relations.
in
the
analysis,
Including
global economy will
which
demand
will describe
and
production
functions which depend on relative prices, we will have a general
equilibrium approach
as proposed by Johansen's 1960 study of the
Norwegian economy.
PATTERN OF TRANSFORMATION:
Growth processes of a developing country can be
best understood as a part of the overall
transformation of its economic structure. This
interdependence
works
in both directions:
income growth causes changes in the composition
of
domestic
demand
and
production, and
conversely, rising investment rates and the
reallocation
of
labor
trend to increase
aggregate growth (Chenery, 1986: 37).
Taking into
growth, and
account
applying this
both
demand
approach to
and
supply
the analysis
analysis for
of a small
developing economy such as Venezuela, we would expect to see many
of the structural changes observed in other developing countries.
The most common feature of industrialization among developing
economies is the shift from agriculture to other, more productive
sectors,
such
related to
last
the
as
urbanization, has
absorbtion
of
population
has
part
this
of
80
reached
in Venezuela during
been observed
The
decades.
three
This process, which is always
manufacturing.
Guayana
global
project
foresaw
phenomenon.
The
the
urban
of the total population in
percent
recent years.
Another characteristic of Venezuelan industrialization is the
high level
of its
exports, and in consequence the high level of
its imports. This is a common pattern among small countries which
are rich
in natural resources; they tend to have a high level of
trade and this high level of
population size
trade
would
increase. Increased
tend
to
reduce with
income from favorable terms
of trade would shift domestic demand.
In the case of
Venezuela, with
respect to
domestic demand,
one reason for changes in the productive structure is the decline
of the share of food in private consumption as income rises. This
shift
in
the
components to
increased after
overall
rise.
pattern
In
of
Venezuela,
the first
demand
domestic
oil boom,
allows
all
other
demand definitely
and there is some evidence
that the second oil boom was absorbed mainly by increased demand.
After
the
effect
of
declining oil prices and the agricultural
policies which followed from
increased dramatically.
this
We would
decline,
agricultural prices
expect domestic consumption to
be affected in such a way that the private capacity
to save will
probably
be
affected;
capacity for private investment for
the
other sectors must also be diminished by implication.
A basic concept to be
analyze the
to
order
in
remembered
Venezuelan industrialization experience is that industrialization
is commonly measured by the rise in the share of manufacturing in
GNP. In a general equilibrium context, as presented by Chenery in
his comparative study (1986), industrialization is
the system
a property of
as a whole, in which the fall in the share of primary
production is offset by a rise in social
manufacturing. Generally
overhead as
well as in
the causes of the rise in manufacturing
differ considerably from those of the decline in primary output.
Venezuela is
a good example of this independent process,
increase of
primary exports we saw an increase in manufacturing,
as well as a decrease in the primary exports without
in
manufacturing.
In
today's
world,
with the
an increase
unlike Presbish's world,
volatility also affects primary production.
As we have shown, Venezuela has comparative advantages in the
production
of
crude
oil,
energy
production
industries, and we would expect that
and the
away
expansion of
from
the
characteristic
tendency
towards
through import substitution
manufactured exports, Venezuela would move
specialization
of
and iron related
early
shifts
in
stages
in
primary
of
products
development.
comparative
that
is
Although the
advantages ultimately
affects all developing countries, their magnitude and timing vary
greatly. As we mentioned before countries
as
such
Venezuela
have
with small populations
relatively specialized economies and a
high share of trade in GNP, and we would expect
that trade share
to decline markedly with increasing population.
In a
country like Venezuela, with access to large amounts of
natural resources, the way in which these resources are exploited
has a substantial impact on the country's comparative advantages.
To
trading
show
the
importance
patterns,
classification of
Chenery
of size and resource endowments in
and
Syrquin
countries, based
proposed
a
two-way
on their population size and
their relative specialization in primary or manufactured exports.
The
typical
small
Venezuela's, seems
and
the
these
cases
increased demand
in the composition of
reallocation
manufacturing
such
as
transformation
of
its domestic
exports make little or no contribution to the rise
of industry. In
result of
economy
to maintain a strong comparative advantage in
primary exports'throughout
demand, while
primary-oriented
of
and
industrialization
with
and
capital
services.
structural transformation
largely the
produced by rising income. The shift
output
labor
is
In
of this
rising
a
income
reflects the
from primary production to
dynamic
analysis
of
the
type of economy, manufactured
imports are replaced much more slowly. The comparative advantages
in
primary
development of manufactured
the
delays
production
exports.
TYPOLOGY OF INDUSTRIALIZATION.
In the
is
emphasis
special
presented
analysis
comparative
on
placed
by
Chenery (1986),
strategies
trade
rather than
internal policy (resource mobilization). This emphasis leads to a
three-way
of specialization (large - L;
pattern
classification
small, primary oriented - SP; and small, industry oriented - SM).
This typology
of semi-industrial economies recognizes the effect
of structural features such as
size
and
resource
endowment as
well as trade policy.
If
we
Venezuela
evidence
take
is
the
trade
an
outward
importance
Following a policy
tried to
policy
of
into
account,
primary-oriented
of
primary
industrial
we
can say that
economy,
taking as
exports in total exports.
protectionism,
Venezuela has
accelerate growth while at the same time making exports
earnings entirely dependent
on
impact
share
on
the
enormous rise
industrial
in
the
price
primary
of
products.
The negative
in output associated with the
energy
in
the
1970's (Dutch
disease) will be apparent in Venezuela.
Chenery (1986)
points out
that, "development strategies try
to accelerate growth
through
either
supply of
the
increasing
labor and capital, or through a more efficient use of resources".
As we noticed before, Venezuelan growth is explained basically by
the
labor
and
input
capital
insignificant contribution
relative
with
importance
of
show
differences
importance
of
how
in
efficiency
in
sources of
trade
levels
growth
rates among countries. Using
estimates of
TFP
has
in
strategies
factor
explaining
both time
inputs,
the
series and cross-country
growth, the efficiency of an economy is
that
its
the
growth
comparative analysis shows us
the average
and
differences in growth
observed growth
from
could be
of efficiency, and the
measured by the difference between its
predicted
had an
to growth. Chenery and his colleagues
constructed figure 3.3 to
associated
where
growth,
efficiency of
of
factor
that Venezuela
the entire
rate and
inputs. This
is not
only below
sample but also below the
group average (I) of the inward oriented economies. In short, the
relative efficiency of the Venezuelan economy in relation to what
could have been expected
from its
factor inputs
growth is very
low.
To
growth
aid
explaining
between
the
countries,
differences
it
has
been
in sectoral sources of
established
that the
principal sectoral sources of growth are: shifts in final demand,
increased use of industrial
advantage away
within
products, and
shifts in comparative
from primary production. In case we are concerned
Venezuela,
as
in
other
42
primary-oriented
economies,
F=161U eE 3.b
Fft.XDW. i1rV~T~
I NPgjTj.AL.-
AND
IDULA)VE: Sf:fi-66NC~
F.ot4COiEt..5.
OP 5"11-
-3
-4
Amy
7.0
6.0
4.o
0 f4%AJ&W-
o lmsw&?T-
6.0
ca~LTE
OftikTg
Cvy (aoowtrt eAIE '14 ft-mCHT
souaZcc: cHek~vzx ptw> vmmc/~
(
c'o4) C0 .
- 9.0
effects
(the
manufacturing
the
of
of
growth
exports
primary
(Chenery,
accelerated growth of domestic income".
than
is
level. "But the
outweighed
are
disease)
Dutch
growth
to
same income
at the
typical for other countries
inhibited
less
contributes
uniformly
manufacturing
by
on
the
1986: 99).
will affect virtually all aspects of development
Timing also
strategy. As in the Venezuelan case, "the exploitation of natural
resources for exports tends to slow down the development of other
tradable
goods"
tendency, we
those natural
(Chenery,
1986:
99).
If
this
is
a general
can imagine what will happen if the exploitation of
resources
is
done
in
excess
of
the estimated
requirements.
TRANSFORMATION OF PRODUCTION IN VENEZUELA.
Because industrialization
of manufacturing
the
tradable
dimensions.
in the
sectors,
is characterized by a rising share
production, exports,
the
figures
and employment of
shown concentrate on these
Figure 3.5
Figure 3.4
Per capita exports
added
value
Per capita
primary products vs manufacturing
Transformation of production and exports during period 1953-73.
~4hLL
St4p1 ~ .L. ~Wh~OMIE~
&WNOW~iE6
If,000
,V,-=Vm
vs.~~e w6Lb~
oo
90,0
100
61
A-
j~,.
\.*
.%
.A~.
.9
in
too
-4
~
**~'-
1%~
%.~~'L
l-
--
00
I
I
3~
U
\
*~fiOtjL~
l1~WAN
I
'
I~I
~
~
I'
1
1
'
I
II
00 200
10
fr
c-rqi& VP&
APPOD d
ii
500 IO0O
MU FAC Tvt i6
so
PFg
i
i
I
I
I
I
I
'
I
I
1
I
I
I
*
so 1oo too soo
to
chriTA-# CyroPT. oF w
<TL e~P
Source: Chenery, (1986), pg 104 and 105.
Ve~nezuela's
characterized by
transformation
a large
(1953-1973)
increase in
capita value
seems that
Venezuela has
shows a
shift toward
exports
and
intensified after
primary exports
exporters (dotted
line SP), which
higher manufacturing shares of production,
employment.
by
Venezuela has intensified
added in primary products in comparison to
the average for small-primary
explained
same time,
constant structure (value added) in its production.
But for the same period it
its per
particulary
per capita value added in
manufacturing (see figure 3.4). At the
maintained a
is
This
increasing
1973.
Due
(oil), the
bias
in
dependance
to
Venezuela's
on
improved
composition of
44
oil
terms
case
revenues
of
is
that
trade for
exports in Venezuela
er.
has
temporarily
reversed
the
tendency
to
shifts
towards
manufactured exports. (see figure 3.5).
In
general
we
observe
a somewhat slower transformation of
production in primary oriented countries such as Venezuela, and a
rapid
transformation
countries. The
producers is
in
mentioned
most
of
slower
the
manufacturing-oriented
transformation
known as the "Dutch Disease" (DD).
among primaryVenezuela is not
exempt from this phenomenon. In 1973, Venezuela had
capital inflow
(10% of 1972 non-oil GNP) that could have spurred
a corresponding GNP growth. In order
happen, we
have to
observe where
to explain
OPEC oil
why this didn't
Venezuela invested the income
from its oil exports. This case is important
of the
a tremendous
because the success
cartel is not paralleled by any of the primary-
producer countries.
The first objective in
the "windfalls"
produced by
economy between mining and
oil
segments.
order to
This
evaluate the
higher oil
prices is to divide the
non-mining, rather
approach
Following table 3.2, Gelb gives
importance of
than oil
and non
is proposed by Alan Gelb (1986).
us
an
indication
of
the base
absorbtion structures of seven oil economies and compares them to
Chenery-Syrquin norms for countries
at a
similar level
of non-
mining income per capita. Venezuela, Iran and Algeria "with large
and long-established oil sectors", stand out as the most mineraldependent.
The
breakdown
of
45
extra
absorbtion
indicates
particulary strong investment biases
Trinidad. What
kind of
in
Algeria,
investment biases
Venezuela and
is Gelb referring to,
and how important are they in relation to the entire economy?
Table 3.2
Composition of absorbtion: 1970-2 in relation to the Chenery norm
Algeria Ecuador Indonesia Iran Nigeria Trinidad Venezuela
Pri C
A/N-M
Norm
Pub C
A/N-M
Norm
Invest
A/N-M
Norm
Absor
A/N-M
Norm
64.5
66.0
75.5
68.0
83.5
75.0
72.2
64.0
80.2
70.0
80.9
78.0
62.8
62.0
18.0
14.0
10.6
14.0
9.8
12.0
23.4
14.0
8.6
14.0
n.a.
n.a.
16.4
15.0
40.8
20.0
20.6
19.0
17.5
15.0
27.0
22.0
22.1
17.0
31.0
22.0
36.6
23.0
123.3
100.0
106.7
101.0
110.9
102.0
122.7
100.0
111.0
101.0
119.0
100.0
115.8
100.0
24
n.a.
76
5
9
86
78
91
Breakdown of extra absorbtion (%)
Pri C
Pub C
Inves
-6
17
83
132
-60
28
96
-25
28
36
41
44
102
-54
51
%oil/ex
79
77
51
90
82
Pri C = Private consumption.
%oil/ex = Share of oil in
Pub C = Public consumption.
exports (1972).
Inves = Investment.
Source: Gelb, Alan. (1986), Table 2.3
A/N-M = Actual /non-mining GNP
The Venezuelan oil windfall
cent
of
Venezuela's
non-mining
of
1974-78
represented
GNP, while the oil windfall of
1978-81 represented 8.7 per cent. After 1979, slower
of oil
sectors reduced
3.6 indicates the average
11 per
real growth
the impact of the price windfall. Figure
time profile
during 1973-1981
of the
windfall as measured above for six countries, expressed
relative
to their non-mining economies each year.
Figure 3.6
The oil windfall and its use
Algeria, Ecuador, Indonesia,
Venezuela
,
1973-1981.
(Unweighted average:
Nigeria, Trinidad and Tobago, and
0.5
0.4
1-~M:C 4D
PEF4 C4 T
0.,5
4910-7Z
Oi L
W
a%1 RLL
lb
7o
1D
15
Source: Gelb, Alan (1986),
7
75
79
90
I
figure 2.1.
In Venezuela, the impact of the oil windfall was reflected in
fiscal
revenues,
and
we
find that central government revenues
jumped from 25% of non-mining GNP to 36%. Total revenues in terms
of
the
percentage
of
non-oil
GNP
accrued
progressed as follows:
From 25.2% in the period 1970-72, to
42.1% in the period 1974-1978, to
36.3% in the period 1979-1981.
to the government
Public oil income in Venezuela had led the
importance over
a long
period of
of the
public sector
to gain
time. As in the case of other
oil exporters, Venezuela experienced
the size
state's role
an "unparalleled
growth in
after 1973
and this sector most
experienced a considerable extension of its
role, towards direct
participation in industrial production".
In this
chapter we
evidence
capital
shows
inflows,
1986).
have sought for a better sense of how to
explain the success or
The
(Gelb,
failure of
us
that
Venezuela
Venezuelan industrialization.
in spite of having had tremendous
did
not
use
them
efficiently to
further its economic growth.
Two
main
explanations
for
this
problem
can be advanced:
First, that exchange rates made manufacturing non-competitive and
promoted
flight
of
capital.
Second,
that
policies regarding
utilization of capital inflows were mistaken; the figures suggest
that
such
investments
were
production, steel and aluminum
in
the
Guayana
region
--
placed
--
all
principally
in
energy-
of them over-concentrated
without allowing resources for other
sectors. Although non-oil private investment boomed in Venezuela,
increased
1974-78
investment
public
was
overwhelmingly
investment
absorbed
about
public. In the period
half
of
windfall
surpluses. In the next period of 1978-81, the use of windfall was
generally similar except that
private
the expense of domestic investment.
48
consumption
increased at
As
1986),
predicted
exchange
by
the Salter-Swan neoclassical model (Gelb,
rates
production structure
appreciated,
towards the
and
be low
if
"the impact
the
quality
accelerated spending"
The impact
the
shift
in
non-traded sectors, dependence
on oil for foreign exchange increased.
expect that
with
At the same
time, we can
of higher public spending on growth may
of
(Gelb,
investment
projects
declines with
1986: 76).
of expanded investment on Venezuela's growth has
been, at first glance,
disappointing compared
to the
record of
other oil-producers, as we see in the table following:
Table 3.3
Algeria
Ecuador
Indonesia
GROWTH TRENDS
(%) in the oil exporters, 1967-81.
Non mining
GNP
Domestic
investment
Goods and non-factor serv
Exports
Imports
67-72 72-81
67-72 72-81
67-72 72-81
67-72 72-81
9.5
4.7
8.5
8.6
7.6
8.2
17.7
3.2
24.3
10.8
10.2
13.0
5.7
15.9
15.7
(1.0)
6.0
4.3
11.6
6.0
16.7
Iran (a) 10.1
Nigeria
9.2
Trinidad
5.3
Venezuela 6.5
10.8
9.7
19.1
13.3
5.3
5.4
5.1
10.2
(b)
6.1
11.9
21.1
8.7
9.3
3.5
12.9
(b)
2.5
(1.3)
(0.3)
(4.2)
(6.5)
(8.7)
17.7
(b)
6.6
7.7
23.7
15.3
8.4
12.8
MEAN (d)
7.3
6.7
12.4
Middle
5.8(c)5.1(c) 8.2
income oil importers
9.3
5.6
7.7
6.7
(1.7)
4.0
9.7
7.4
12.7
1.5
(a) 1967-72 and 1972-7
(b) Deflated data unreliable before 1970.
(c)
GNP
(d) Excluding Iran
Source: World Bank in Alan Gelb's "Adjustments to windfall gains"
On average,
real private
were larger than public
the next
consumption and public investment
consumption in
period a further rise in
a substantial cut in
of Gelb's
1974-78. For
consumption aggregates implied
investment. The
example was
the period
non-oil growth performance
exceptional in the 1967-72 period. At 7.3
per cent, it was some 1.5 per cent higher than the average growth
of GNP
in middle income developing countries. Also, average non-
oil growth after 1972 was still 0.6 per cent more rapid than oilimporting developing
countries through
the favorable period the
Venezuela non-oil
growth was
1970's.
In the
during the
case of
period 1967-72
6.5 per cent
and 5.1 per cent for the period 1972-
81. During the latter period economic growth was the same
average for
middle-income countries, and it should be noted that
domestic investment for the period 1972-1981
3.5 per
as the
cent not
only lower
than other
was on
the average
oil producers but also
lower than middle income oil importers.
As we studied
analysis of
later
in
examining
Chenery's comparative
developing countries, growth in income is associated
with a shift from
and
before,
on
primary production
from
tradable -agriculture
construction. In
the
and
table 3.4
sectors
to industry
and services,
conventionally
considered as
manufacturing-
towards
services and
we can see that Venezuela had one of
the most severely skewed economies in
50
sectoral terms
before the
oil
price
rise,
that
is
skewed
in
terms of the size of the
service sector (67 per cent in 1972).
Table 3.4
Sectoral Structure. Initial conditions 1972.
Alger Ecuad Indone Iran
Niger Trinid
A N
A N
A N
A N
A N
A N
Agriculture
Manufacturing
Construction
Services
(MI)
11
16
13
60
18
25
20
5
50
4
23 26
20 19
5 5
52 50
2 4
Source: Gelb (1986). pg 81.
45 46
11 11
4 3
39 40
12 6
22 18
18 25
6 6
53 51
28 3
39 38
5 15
11 4
45 43
15 5
6 16
22 26
8 6
64 52
9 2
Venez
A N
8 14
19 27
6 7
67 52
20 2
A = Actual N = Norm (Chenery, 1975)
Venezuela, with Algeria and Indonesia, managed to strengthen
their
non-oil
tradable
sectors.
These
three
countries
also
managed to raise domestic food and agricultural supplies. Despite
a policy objective of
reducing
oil-dependence,
non-oil exports
contracted on average 1.7 per cent annually during the period 7281. Venezuela, Nigeria and
Trinidad did
not experience
a sharp
decline in agriculture and manufacturing.
As we
noted several
the countries studied by
petrochemicals and
times before,
Gelb,
heavy metals,
and communications systems.
and
complex
and
following table).
frequently
Venezuela, like most of
channelled
windfall
gains into
as well as developed transport
Public projects
tended to
be large
were highly capital-intensive (see
Table 3.5
Macroprojects in oil-exporting countries (a).
Country
No.of Cost
proj.
($b)
Aver. Cost Cost Rank Hydro Metal Other Infra
Cost 1980 1980 amo. carbon
Ind. struc
($m) GNP wind devel.
ture.
fall countries.
Iran
108 119.6 1,107
Algeria
69 38.7
561
Venezuela 27 27.4 1,015
Mexico
59 26.0
441
Nigeria
19 14.4
758
Indonesia 44 14.4
327
1.57
1.07
0.51
0.18
0.17
0.23
10.2
4.2
5.4
5.1
0.9
1.1
Trinidad(b) 7
1.35
4.5
6.9
983
2
5
10
.2
15
16
30
36
33
46
26
41
7
7
41
17
11
18
9
33
7
12
16
16
54
23
19
25
47
25
--
61
29
--
--
(a) Projects with costs exceeding $100 million.
(b) Gas-based industrial projects only. Includes Tenneco-Midcon
LNC project proposed for 1988.
(c) 1977 GNP and oil windfall.
Sources: Murphy
(1983) table 2.5; Auty and Gelb (1984) and table
2.13 in Gelb's "Adjustments to windfall gains" (1986).
Venezuela's
investment
program
placed
heavy
emphasis on
metals (steel and aluminum), representing five times its 1980 oil
windfall or half
Principally
in
its
the
1980
Guayana
accumulated in this region?.
partially put
GNP.
forth in
Where
are
these investments?
region. Why have those investments
The
answer
to
this
chapter 2, where we studied the linkages
between the Accion Democratica party, which was the
the first
question was
recipient of
and decisive oil windfall, and the Guayana Development
Corporation. In
my
opinion
these
described set
the precedent
the
(Black-hole
effect),
arrangements
within
region
institutional
huge
investments previously
of the current large investments in
52
which
CVG
in
turn
caused
in order to achieve the
industrial support required by
the industries
already in place.
This restructuring will be the focus of chapter 4.
4) CORPORACION VENEZOLANA DE GUAYANA (CVG):
In
order
to
understand
fully
the
chapter we should briefly recapitulate
significance
what
we
have
of this
seen thus
far.
Chapter Two covered the following points: First, we outlined
the progress
the end
of a
of the
successful import
substitution process, from
40's up to mid-70's, and how this model seems to
have become exhausted. We also saw how the
and industry
collaborated during
observed how the
government,
Venezuelan economy
launched the
linkages
Guayana
between
AD
and
AD
an
and
We
Guayana's
for
explain
attempt
to
economic growth
development.
becoming a strong image
Guayana
the democratic era. Second, we
in
and balance
Venezuelan government
the
noticed
in the country,
the ideological
development,
former.
The
the
latter
linkages between
the large investments in Guayana since
1973. Third, we observed the current situation of
economy, where
diversify the
the Venezuelan
the Government is faced with reduced incomes and,
in its urgent necessity to reactivate the economy (no real growth
from 1980
to 1985), it seeks investment
from private or foreign
investors or through added new debt. These additional investments
have many
new
funds:
investments
prospective clients
the
in
state-owned
order
to
who wait
enterprises
get
a share in these scarce
which
require
more
out of the red, and the private-
sector partners.
54
Later
on,
importance of
in
the
third
chapter,
These
performed
so
took
note
of the
the investments made in the heavy metal industries
complex of Guayana in relation to
increases.
we
investments
poorly
in
the gains
help
from the
explain
comparison
to
why
many
oil price
Venezuela has
other developing
countries.
In this
chapter I
will explain
how CVG is implementing an
import substitution industrial strategy
installed
industrial
substitution policy
This time
CVG is
complex.
This
for consumer
designed to
is not
goods as
an
support the
simple import
it was
in the 60's.
attempting a more difficult and delicate one:
the substitution of industrial inputs and capital goods
complex.
For
this
next
period,
CVG
is
depending
participation of the private sector, but
the private
alternative
having
investments
and
distrusts
for this
on
the
sector has
the state-owned
enterprises as a principal client.
This key variable of alternative investments for the private
sector is
the dilemma
the integration of the
sector. This
that CVG has to solve in order to promote
state-owned enterprises
with the private
chapter will investigate the steps CVG is taking to
accomplish this delicate task. In doing so we
must remember that
the expectations in 1965 for the Guayana region in 1980 were that
it would be a main export center. With this in mind we
will then
into
enter
conclusions
the
of
this
thesis
with
regard
to
Venezuela's economic crisis.
4.1) Introduction.
The implementation of CVG's new industrial objectives cannot
be fully understood without presenting the internal restructuring
of
CVG
and
the
evolution
of
its
previous
goals
within
a
historical framework.
4.1.1) Original Objectives:
The
Guayana
Development
Corporation
was
created
by
presidential decree No. 430, enacted on December 29, 1960, in the
form of an Autonomous Institute of the Venezuelan State, attached
to the Office of
the
President
of
the
Republic.
Said decree
assigned to the CVG the following objectives:
a)
To study
the resources
of Guayana, both within the zone of
development and outside of it when required by their nature.
b)
To study,
develop
and
organize
the
exploitation
of the
Caroni river's hydroelectrical potential.
c)
To program the development of the region in accordance with,
and within the scope of, the National Plans.
d)
To promote the development of the region in both the private
and the public sector.
e)
To coordinate the economic and social activities carried out
in the region by various official organizations.
f)
To contribute to the organization, planning, development and
operation
of
the
public
utilities
required
for
the
development of the area.
g)
task which
Executive, any other
the National
To carry out, by fiat of
may be connected to operations outside the zone,
in cases where there
exists a
close relationship
to those
being performed within the zone.
4.1.2) Goals:
The activity
of the
Guayana Development Corporation is set
out by the guidelines of the
Regionalization No
action of the
Amazon and
VI National
478, which
Corporation
to
Plan and
expanded the spatial scope of the
the
Federal
in
Territories
of the
Delta Amacuro. In this sense, CVG participates in the
formulation, coordination, and evaluation
and
by Decree of
the
execution
of
of plans
projects
related
and programs
to
physical
infrastructure, urban regulation, mining, agricultural and forest
developments, promotion
and execution
of technical improvements
and training programs.
According to Decree number
the
Republic
on
February
coordination of the
region. It
State
was necessary
2, issued
2, 1984,
enterprises
by the
Presidency of
CVG is entrusted with the
located
in
to amend its organic statutes to adapt
its organization and operation to this new mandate.
CVG work
through two
the Guayana
To this end,
kinds of managerial units: the enterprises
and the Office of the
these two
Vice
President
for
Development. Through
units, CVG fulfills its responsibilities: the integral
development of the region, the coordination of the
public sector
agencies and the coordination of the State Enterprises.
4.1.3) Industrial Development:
The Guayana
by
their
region has
variety
and
of
good
development
a
at its disposal of resources which,
quantity,
part
of
are
ideally
the
industries needed by the
suited
for the
country for a first rate development:
a)
Abundant water, both for
the production
of energy
and for
industry, navigation, agriculture and human consumption.
b)
A port, capable of handling an intense river traffic of more
than 700
ships per
year, through
the use
of the existing
wharves in Cuidad Guayana.
c)
High
content
of
iron
and
bauxite
ores as well as other
minerals; abundant and low-cost hydroelectric power, oil and
gas
in
the
neighboring
Eastern region which includes the
Orinoco bituminous oil belt,
and the
most extensive forest
reserves in the country. Moreover, its advantageous location
on
the
Orinoco
navigation
channel
gives
products
from
Guayana a ready access to international markets.
The
Guayana
program
was
conceived
contribution to the diversification of the
means of
as
an
important
Venezuelan economy by
the development of an industrial complex based on these
58
extraordinary resources,
and this is
goal
creation
consists
of
the
competition with Caracas and
center
of
balanced
for
attraction
national
its main objective. A second
of
a
pole of development, in
other cities
and
country, as a
so as to lead to a more
population,
development
of the
incorporate
to
into
the
Venezuelan economy an immense region which, although historically
important, has remained underpopulated
When speaking
and practically marginal.
of the Industrial Development of Guayana, one must
take into account that it has been oriented not only
national
market,
but
also
the
importance
towards the
towards the full realization of its
export potential.
To
reaffirm
suffices to
mention the
1975-1979 period
sector,
which
both
bolivar
investment
by
the
42
public
to
quote
two
Guayana
program, it
sector
and
the private
billion bolivars. The Plan IV steel
represents
while
by
the
production increase amounted to
only
the
investment plans carried out during the
exceeded
production expansion
of
itself
investment
3.5 billion
outstanding
examples,
only
in
a
15 billion
the
aluminum
bolivars. These are
without
mentioning
investments in specialty steels, ferrosilicons, cements, forging,
castings and other products.
The
240
meter
drop
second largest river - in
confluence with
of
its
the Orinoco
the Caroni - which is Venezuela's
last
210
kilometers
before its
river, represents a hydroelectrical
potential of more than 17 million
kilowatts, one
of the largest
of any river in the world.
A general
perspective of the main achievements and plans of
CVG is given in table (4.1).
4.2) Organizational evolution.
CVG has
industrial
progressed
program,
from
to
a
corporation
the
State
region.
its
creation,
enterprises
the
located
of an
in
the Guayana
in charge
of the
the Caroni River hydroelectrical plant, the steel
plant and the new
Government
charge
Corporation had gone through
various stages; at the beginning it was mainly
development of
in
Regional Development Corporation and
coordinator of
Since
a
city.
(1978-83),
During
CVG
the
last
Christian Democratic
suffered
from
a
certain degree of
financial constraints. One reason for these financial constraints
may be that the Guayana project has never been a priority for the
leaders of this party. This is demonstrated by the actions of the
Ministry
of
Public
Works
in the previous Christian Democratic
government, which was mentioned in Chapter 1. Having no political
support,
CVG
had
three
different
Presidents
during
that
government (1978-83).
The reduced income from
the oil
industry has
moved public
opinion against the actual government. As we noted, the resources
TABLE 4. 1
* ** *.* *** * *.*:** *.**** ** * **** * **** * ** * **************
GUAY ANA DEVELOPMENT CORPORAT ION (CVG)
***
** * ***
** **** ***
Program of developments
RESOURCE
ENERGY
ALUMINUM
STEEL
FOR
196)
Macagua I
3.60 000 KW
Non existant
Sidor
1, 000, 000 tons
FOR 1986
FOR 2010
Guri
10,000 MK
Bajo Caroni
Macagua II
Tocoma
Caruachi
18,000 MK
Capac i ty
40).())C) tons
2nd plant +
3th complex
Capacity
2, 000, 000 tons
Si dor
4,800., 000
Pellets
Si dor
tons
6,600 , 000
Direct reduction
4 , 00C) 000 tons
GOLD
Free explotation
Mi nerven
1., 500 Ks.
WOOD &
PAPER
Pellets FMO
10 , 0v0,00 tons
New modul -recov.
5, 500, 000 tons
Minerven new plant
& ref of 3,000 Ks.
Caribe pine
190., 000 Has.
Pulp plant proj.
Caribe pine
400, 000 Has.
Pulp plant CTMP
200, 000 tons.
Pulp plant Kraft
200,000 tons.
Lumber mill
Widening of the
chanel to Pto
Ordaz
Widening and
signalization
of the chanel from
Pto. Ordaz to el
Jobo (BauXiven)
Bux iven projectterminal P. OrdazEl Jobal project
Navegation:
- Middle Orinoco
- High Orinoco
- Apure - Orinoco
resot..trces
Widening
hydroelectric
resources
Widening
hydroelectric
resources
Ferry boat betwwen
Pto. OrdaZ y San Fel
i x
Free explotation
OR INOCO Chanel up to
Pto. Ordaz
Ferry boat between:
Bolivar-Monagas in
Los Fajardos
Bol :i var-Anzoategui
in Soledad
CARONI
4, 800, 000 tons
Utilization
hydroelectric
of
URFJAN
Inteoration of
urban centers.
Roads
Ferv boats
System af roads
and avenues
Bridges:
-
Two bridges over
Caroni
INTRA-REGION
Ferry boat:
-
Rio Aro
Rio Caura
Rio Cuc:hivero
Railroad:
-
El Pao-Palua
Piar
City-PtoN
Or d a
INTERREGION
Ferry boat:
Bolivar to Monagas
between San FelixLos Barrancos
Bolivar to Anzoategui between
'Bolivar-Soledad
Bolivar to Guarico
between CaicaraCabruta
POPULAT ION
Guayana 115,000 habs
river
Widening of road
Highways:
C. Bolivar-P.Ordaz
S. Felix-Upata
Fery boats:
Rio Caura
R. Cuchivero
Bridges:
Rio Aro
Rio Caura & Rio
Cuchivero (const)
Bridges R asphapt:
El Dorado-S. Elena
Caicara-Pto Ayacuchc
Widening of
road system
Angosturita bridge
and rail
(mix vial
Express system
between S.FelixGuayana City.
Highways:
S. Felix-Upata
Integrated road sy
Conclusion DoradoSta. Elena and
Caicara-P.Ayacucho
Bridges:
Caura and Cuchivero (conclusion)
Express system (S.
Felix P. Ordaz)
sys-Widening of the
Integrated vial
system.
vial
tem.
Bridges:
Bridges:
IInd bridge over
Angostura-Orinoco
the
Orinoco river.
between C. Bolivar
bridge over
IInd
and Anzoategui
the Orinoco (rail)
Ferry boats mainRailroad system
between:
tained
joining Bolivar st
S. Felix-Los
with the rest of
Barrancos
the country.
Cai cara--Cabruta
978,068 habs
2,300),000 habs
habs
1 ,200,C00
350,000 (1979)
Guayan a
(1985)
554,704
Guayana City
*** ***** ** * ******* ****** ************* *** ************* **** ******** *
Sources:
CVG - Oficina para el nuevo enlace sobre el Orinoco
Maria Engracia de Delgado (1986)
*
..........
ZONA DE DESARROLLO
POR
EL ESTATUTO
CAPITALES
DE ESTADO
LIMITE
DE ESTADO
LIMITE
DE DISTRITO
VIALIDAD
ESTABLECIDO
C.V.G.
PRIMARIA
VIALIDAD SECUNDARIA
--
CARRETERA
DIQUE
DIGUES
DIGUES EN PROYECTO
OLEODUCTOS
GASDUCTO
AEROPUERTOS
DESARROLLO
ISLA
PROYECTO
RECURSOS
AGROPECUARIO
GUARA
AGROFORESTALES
ZONA DE MANGLARES
(3%
PETROLEO
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DIAMANTE
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CARBON
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MAGNESITA
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to achieve economic growth at the State's disposal are the public
(basically
industries
and
oil
complex)
Guayana
the
and the
private sector (industry and agriculture).
to the
again given priority
(1983-1988) has
The new AD government
Guayana project, and some changes have been made in order
to increase CVG's autonomy in relation to the executive branch of
government.
of
One
the
major
in
made
changes
1984 was the
decision that the President of CVG will also be a Minister of the
Government.
directly
to
difficulties
This
means
the
that
President
that
a
of
rose
President of CVG will report
Venezuela,
when
Ministry of Development. At
State enterprises
the
CVG
the same
located in
bypassing
was
subordinated
time, CVG
the Guayana
previous
to the
coordinates the
region, since some of
the state-owned enterprises had major equity participation by the
Venezuelan Development Fund (for example, Alcasa).
At
present,
after
the
institutional
renovated political commitment to the Guayana
coming directly
from the
and
the
project, funds are
Inter-American Bank and the Venezuelan
Development Fund through the
These resources
changes
Industrial
Credit
Fund (FONCREI).
have been principally addressed to the aluminum
industry,
for projects such
the "Los
Pidiguaos" bauxite
smelters
of
ALCASA
from
as the
opening and
exploitation of
mine, the expansion of the aluminum
125,000
to
200,000
tons,
amplification of VENALUM from 250,000 to 400,000 tons.
and
the
4.3) New leadership - Leopoldo Sucre Figarella.
Now that
of CVG,
Figarella has become the new leader
Lepoldo Sucre
to advance from
its goals
will pursue
the corporation
of an industrial park to acquiring responsibility
mere promotion
for the development of the entire region and coordinating all the
activities. Figarella,
whose leadership skills are indisputable,
descendants of
is a native of the Guayana region. His family are
a group of Corsican families who have played a strong role in the
economy and leadership of
Bolivar)
through
its
the region
from Bolivar
Figarella
history.
City (Ciudad
was also Minister of
Public Works throughout the AD period from the dictatorship until
the Christian
Democratic government
of 1969-1973. This position
provided him with local support and
technocracy. His
achievements
programs.
leadership since
and
The
resources set
the support
broad-based
institutional
aside for
1983 is
local
of the national
evident in the rapid
support
for
the regional
changes achieved and the financial
the region
since 1983
are examples of
Figarella's executive abilities.
4.4) Recent economic objectives:
There
is
no
doubt
important role in the
order to
that
industrial
the
Guayana region must play an
reactivation
of
Venezuela in
keep pace with the new job requirements added each year
and even to absorb some of
the present
unemployment. The region
offers
the
resources
natural
(principally
which
achieve a diversified economy,
resources) to help
reduce
may
dependence on
oil.
The decline
promoted
of oil revenues and the economic situation that
devaluation
reexamination of
in
1983,
have
the national
the
industrial
government,
nine
months after
required
industrial strategy.
the Guayana region, the first
redefining
obviously
available
strategy
In terms of
from
document
came
from
devaluation and
a
the
the CVG
previous
one month before
new elections. The new strategy proposed:
- Linking
the
basic
industry
to
the
medium
and
small
by
import
industries.
- Reducing
the
vulnerability
of
basic
industry
substitution.
- Expanding
present
regional
development
to
include
new
territory.
- Use of industry to take advantage of the primary sector.
- Complementing
the
industrialization
process
with
a
commercialization process.
Linking basic industry to medium and small industry.
At the
end of
1982 CVG was aware that commercial and other
industries were closely related
to basic-industry
fact
between
that
such
a
dependency
necessarily mean that it
is a
the two exists does not
correct model
63
activity. The
to follow.
At the
time it
would occur
that harmony
was projected
when small and
medium size industry produced the majority of the inputs required
by
basic industry.
Reducing
the
industry
of
vulnerability
means
by
of
import
substitution.
The next
step
in
opportunities
which
Currently, it
could be
promotion
industrial
arose
when
the
cheaper to
results
bolivar
from the
was
devaluated.
produce locally
some of the
inputs for industry. Large amounts (60 per cent) of inputs to the
Guayana complex were imported
was to
reduce such
in 1982,
imports. For
will no longer import
as much
and the
first challenge
example, the aluminum industry
bauxite, once
the development of
the bauxite mines is completed (BAUXIVEN).
Integrating
regional
development
with
regional
spatial
region must
not only
development.
The industrial process in the Guayana
take
advantage
of
the
large
resources of the region but also
promote the extension of this development to marginal areas, even
those regions
where there
these reasons it
seemed
is no significant State presence. For
necessary
to
flank
the
economic and
financial decisions with considerations of regional strategy.
Use of the industry in the development of the primary sector.
This was
of
understood as
agriculture and
certain
the development to a certain degree
organizational
development of
also the
agro-industry, and
for the exploitation of precious
models
minerals in an industrialized and profit way.
Complementing
the
industrialization
with
process
a
commercialization process.
The purpose
of this step was to establish support for those
industries which, because of
commercialization process
their
could
size,
not
develop a
themselves. Its goal was to allow such
industries to place their products abroad. In this way, the small
and
medium
sectors
will
benefit
their own international sales
import
substitution
model
even though they do not have
organizations.
started
to
At
this
time the
show the possibility of
exports.
4.5) Division of Industrial
and
Mining
Promotion
(Gerencia de
of
the strategy
promocion Industrial y Minero).
Especially
after
the
devaluation
1983,
explained previously, needed a channel for its implementation. In
consequence the
division of Industrial and Mineral Promotion was
created (or reformulated its previous goals).
One of the first ideas developed
create
an
information
service
65
to
by
be
this division
used
by
all
was to
of
CVG,
especially by the industry
offered to
promotion division
to be
Servicio de informacion para el
(SIDI or
the public
itself and
desarrollo industrial). Such an
was designed
information system
to cover the following subsystems:
1) Access and information recovery.
2)
(SIMA);
Aluminum
the information related to
all
including
Bauxite, alumina and aluminum.
3) Industrial inputs (Subsistema de insumos industriales SII).
4) Legal information (Subsistema de informacion legal SIL).
5) Financial information
SIAF),
related
to
(Subsistema
de
informacion financiera
mechanism, financial entities disposable for
industrial promotion.
6) Industrial projects and
information
register
(Subsistema de
informacion y registro de proyectos industriales). This subsystem
includes
a
project
bank
Development Division.
which
This bank
was
initially
has now
the Industrial
become public. At that
time, an initiative to identify potential new industrial projects
called
project-ideas
characteristics
of
was
the
also
region
promoted
and
to
to
take
consider
the
advantage
the
potentially become industrialized.
Also,
the
Division
of
Industrial
serious effort to initiate an industrial
Promotion
proposed
input survey,
a
not only
covering basic industry, but also the whole industrial complex of
the region. All these new
ideas
Division
and
of
Industrial
led
Mineral
to
the
promotion
Promotion
of the
(Gerencia
de
promocion industrial y minero) as the
responsible agent
for the
new strategy in the government.
4.5.1)
Import
substitution
committee
and the promotion of new
industries:
There will be two focuses of the new division: first, import
substitution for
the Guayana
complex, and
second, promotion of
new industries. In the context of Guayana, the
import substitution
and export-oriented
issue. Most of the actual effort by CVG
appraisal
of
the
input
state-owned enterprises
industries is a crucial
is oriented
requirements
industrial complex. The corporation
trade-off between
of
the
towards the
Guayana
is collaborating
heavy
with other
such as PDVSA (oil corporation) in order
to measure an aggregate demand and
develop a
coordinated import
substitution strategy in such industries.
The
CVG
objective
promote, could have a
the state
has defined
is
certain export
capacity. In
other words,
certain areas where private investors can
obtain definite guaranteed
there excess
that the industries which they will
sales
to
CVG
industries,
and from
capacity can be transferred to exports. Even though
there have been no policies for specific export
industries, some
export industries have appeared. What does not seem to be defined
is a strategy for promoting export oriented industries per se.
4.5.2) Import substitution committee:
Since the first attempts to
the
evaluate
demand
of basic
industry, there has been resistance from the purchase departments
of
Guayana
the
about
information
principally from
to
industries
inputs;
the
the
the
Regional
(1983) made evident the necessity to
input.
The
requested
have
come
Private Industries.
of
industry.
The
policy since 1983
in
produce locally
the basic-
private industries demanded information in
order to address their
basic
complaints
such
Chamber
of
industries increased their claims when devaluation
These private
industry
provision
efforts
reality
the
to
is
supply
that
Guayana
the
requirements of
the import substitution
complex
has
had relatively
little success.
It is
from this perspective that we must analyze the import
substitution strategy for the Guayana complex.
the
Import
Substitution
Committee
Importaciones) was created with
CVG industries.
(Comite
In September 1985
de
Sustitucion de
representatives from
all of the
This committee's principal goal is to coordinate
actions in order to
achieve a progressive and
effective import
substitution. The committee's main goals were determined as:
- Diminishing the dependency on foreign supplies of raw
1)
materials, machinery, equipment, spare parts and technology.
2)
-
Joining
efforts
to
diminish
the
negative effects
related to the flight of foreign currency.
3)
- Contributing to the increase of the private industrial
park, through consolidation of
the installed
facilities and the
creation of new investment opportunities.
In 1986,
the achievements
of this committee could be summarized
as follows:
- Creation
of
a
unique
register
of
suppliers,
in
order
to achieve common
technical standards for imported inputs.
- Disseminate
the
import
substitution
policy.
- Evaluation
of
metal-related
industries
installed in the region, in order to estimate
their capacities for import substitution.
- Exchanges among the different importsubstitution committees in the different CVGindustries.
- Evaluation of
the progress/status of the
import substitution
industry.
program
for
each CVG-
- Development of product specifications for
common products in the basic industries.
- Presentation of a
list
of project-ideas
to the "Gerencia de Promocion Industrial".
- Presentation
of
the
achievements
to
different governmental agencies, chambers of
commerce,
PDVSA
(oil
corporation), and
Engineers' professional association.
- Establishment
of
guidelines
for
an
information register for each industry.
- Utilization of
common experience and
specific information
to
evaluate common
objectives,
such
as
qualification
of
suppliers.
- Organization of a
forum
national entrepreneurs
substitution.
- Support
of
a
with
local and
interested in import
special
South-West trade
(Guayana-Andean)
for
the
experimental
transport of metallurgic coke to the Guayana
complex via the Orinoco river.
- Establishment
and
utilization
of
a
continuous process of providing information
among
national
agencies
in
order
to
facilitate information on the exchange of
common objectives and experiences.
- Provision of
a list
of requirements for
parts and pieces actually
local chambers of commerce.
- Attendance
by
substitution
import
the
to the
imported
committee and the personnel of the basic
industries at a presentation organized by
PDVSA to present the unified register of
PDVSA-suppliers to the oil and petrochemical
industries.
- Coordinate
meetings
CVG-
the
with
Corporative Planning Vice-presidency and the
for the
committee,
substitution
import
analyzing import substitution
purpose to
problems and studying possible alternatives
to advance in the process.
4.5.3) Identification
of new investment opportunities, promotion
of new industries and the implementation strategy.
The promotion of new industries can
from
implementation
the
strategy.
beginning of 1983 CVG initiated
a
not be
seen separately
As was noted before, at the
compilation
of
the project-
ideas that the Corporation had accumulated since 1960 and decided
to
amplify
this
project-idea-register
(pre-investment). Then,
with the creation of the Industry and Mineral Promotion Division,
CVG
selected
consulting
seven
companies
Marshall y Asociados,
financing
of
of
the
largest
(Inelectra,
Cavein,
feasibility
and
studies
Venezuelan
engineering
Technoconsult, Vepica, Otepi,
Proyecta)
to
be
and
proposed the
done by one of these
companies (sharing the expenses and the risks).
Once the project-idea is identified, the
makes a
proposal for
a feasibility study at market prices. Once
an agreement on such a study is achieved,
cent of
costs of
consulting company
CVG then
gives 50 per
the study to the consulting firm. The other 50
70
per cent is
the
consulting
the consulting
practiced by
places capital and
or
utilities,
by
covered
the
money.
firm is
firm
can
Then,
if
consulting company will be a
not important
participate
the
The modality
company.
study
stockholder
in
to CVG; CVG
with
its labor,
is
favorable, the
the
new industry.
does not have to come exclusively from CVG,
This project-idea
it
can come from any source.
The most important result is that
use of
the local
in this
way an efficient
"know-how" is guaranteed, because no one else
has a better understanding of the national engineering capacities
than these firms.
This practice manages to combine two worlds,
one with the financial resources and one with
the resources of information and "know how"
(Interview with Rafael Pena, Manager of la
Division de Promocion Industrial y Minero,
January 1987).
This practice was well
most of
them having
received
by
the
Consulting firms,
been in precarious situations prior to this
initiative.
In
1984
CVG
CORPOINDUSTRIA
enterprises) and
The interest
signed
(in
two
charge
the other
of these
important
of
medium
One with
and
small
FONCREI (Industrial Fund).
agreements is to reinforce collaboration
and
grant
Guayana
to
promoting
one with
between CVG and the small
resources
agreements:
the
previously accorded with the
medium
size
region.
industries,
Such agreements were
Venezuelan Development
71
and to
Fund. Also,
collaborative
activities
were
undertaken
between
CVG, CI and
other industries without formal written agreements.
the
industrial
park
survey
Examples are
realized in 1986 and the exchanges
with the Industrial Chamber of the Zulia region.
the
After all this effort on
outcome of
the strategy
part
of import
of
CVG,
which
is the
substitution, the next table
gives us the value and quantities substituted in by the different
enterprises:
Table 4.2
Results in the process of import substitution in
CVG's state owned enterprises.
Concept
A
Quantity (1)
1983
B
A
-
503
1984
B
964
A
-
1985
B
2,538
3
1986
A
B
3,514
6
(accumulated)
Amount (M bs)
at Bs 7.5/$
at Bs 14.5/$
increase
74
$9.9
$5.1
119
$15.9
$8.2
60%
190
$25.3
$13.1
60%
(1) Quantity of inputs substituted.
A = Material and spare parts
312
$41.6
$21.5
64%
B= Raw materials
Source: Committee on Import Substitution (1986).
Firms: Sidor, Venalum, Alcasa, Interalumina, Fesilven, and
Ferrominera del Orinoco (Iron ore mines).
This table is the
theaction
of
the
new
only
information
strategy.
The
available
to evaluate
information
provided is
useless since we can not refer to the total amount
of imports to
ire
TOTAL AND PER CENT EXPORTS:
:
TABLE 5.1
=
=
=
.
==m=
Mmmm=
=
=
=
===
=
=
==
=
of SDRs)
1975
1974
1973
Year
===
Millions
==mu=
=
========
=
CoMModi ty breakdawn:
-
18
0.2%
AluMinuM
e.ports
per cent of total
interawual change
-
Iron
109
1.5p
ore
esports
per ceut of total
interawual change
-
247
3.4%
Other
1
I
exports
per cent of total
interams.al change
change
EXPORTS IN GNP C4>
interaual
SHARE OF
30. 3%
Sour-ce:
1>
C4)
'Balance of Payment-s Statistics".
Ministery of Energy and Mines.
TABLE
5.2
: NET EXPORTS
OF THE GUAVANA
mm
1972
1971
Yea-.
EXPORTS:
Aluminum:
====
===========
m
=
114
0.8%
5.6%
108
1. 0
1>1
Aount
Value
C1)
TAP CMT3 (1>
<2> & C3>
Value
27.9%
REGION
mmmmumm
326
2.2%
14.4P
265
2.6%
15.4%
16,930
14,638
10,959
15.7%
33.6%
51.1t
29.7
32.2%
30.5%
24.6%
1975
1974
1973
1976
1978
1977
====
14,793 1
-12.6%1
24.3I
1983
1982
1981
==m==m
========m===m======
====m=====
14.3
14.0
10.4
10.1
11.3
11.4
6.3
7.6
17.0
18.7
102.7
143.7
209.1
335.3
233.9
366.1
208.6
275.4
I
1
I
292.2
386.0
924
1,127
1,063
1
1,031
1,069
941
868
696
21.3
<:2>^
1,495
54.3
C2>^
2,077
113.1
<2>^
2,030
159.7
C2)>-
2,278
I
2,320
13,600
6,500
600
149.7
4.0
15,260
12,400
700
139.1
5.1
16,103
11,800
2,900
279.1
10.4
15,531
13,600
2,900
334.4
8.7
189.7
336.1
727.5
860.2
179.3
2
281.5
24,772
9,106
250
274.5
0.9
18,685
8,457
575
229.4
2.5
13, 683
6,338
250
171.7
1.5
i
W
m===M nmmmmm==am=mwmm= w=mmum =0 a==== w" ===mum mmmumftmm
15.5
2.6
15.3
2.6
=======
m
wminawmm wwmmMmam
9.2
2.2
0.3
12.6
2.2
0.4
6.0
1.4
0.6
66.7
15.3
6.9
34.3
7.9
3.3
32.7
7.5
4.4
17.1 1
3.0 1
41.2
7.6
31.2
6.7
60.0
13.4
52.0
11.6
75.5
26.5
191.9
70.0
251.9
94.5
348.3
141.5
323.0 1
129.4 1
330.0
122.9
8.1
7
1!.7
145.9
135.5
I
128.2
=======m=m=mm
m m=m====
===---====-==-====--==-===----=-=mm
=nmm
76.9
27.1
12
========
=m ==m
==m====
=
97.0
=======
=======
259.2
629.7
=u==m======i==
C1995>, United Nations.
C>) Yearbook of International CoMModities Statistics
- Yearbook, 1984. Voloune I.
C.2) Trade Statistics
Original source Sanco Central de Venezuela.
Country profile.
C3> EIU. Uenezuela 86-87.
C4> Ministory of Energy and Mines. Lagouen "Data on Petroleum and EconoMy of Venezuela".
1984
====
784
5.6%
11.4P
67.0 11,121.0
15.9 1
264.5
5.3
6.1 1
======i===m===
=======
370.0
C3>^
411.0
C3> ^
134.0
C3)^1
192.0
<3>)^
13,3 10
16, 107
4,686
81.0
C3> -
15,481
19,050
5,102
108.0
C3!)^
TAP
711.0
no Own own
,
==m=m===m
714.3
============-= ------------= Total Amount Produced
=n ===========
1985
=========
585.0
3.5
0.8
0.3
===n===
704
4.5%
31.31
wwmammmwmwmwwmwnam a=*m=amownminnn
6.6
2.3
0.5
162.6
=====
winmmmmmmm
11,200 1 9,449
12,900 1 12,250
4,000 1 3,542
186.8 I 161.6
21.9
21.4 I
2.3 1
0.7 I
0.1 1
3.1
a
w========
106
0.OP
34.2%
13,963
15,577
13,631
14.3% -10.4%
-7.9%
24.8
27.5%
22.3%
1
=======
79
0.5%
5.3
1986.
1980
1979
m===m====
==m====m=m
m====
===========m=mm
TOTAL DIFFERENCE:
==============
536
3.9%
29.5%
414 1
2.81
-4.2%1
432
2.6%
32.5%
10.5
5.8
TOTAL:
====
=
405
2.97
12.2%
~12.2%
75
0.6%
0.0W
75 1
0.5%
Sp
-47.6%!
143
0.4?
2 5. 4%
7.9
5.0
A
IMPORTS
Bausite AMount Gross CMT3 C1>
AMount Al CMT3 C1>
IMportsCS3 <1)
========n
3
1985
==
=
361
2.3%
411
3.0%
43.2%
287 i
1.9pli
-.
=
==
10.6
6.7
mmw==
Alumina AMount CMT3 Cl
IMportst*3 <1>
=
of US dollars>
Cin Million
TOTAL:
mm m
mmmmmmmm
=
=
347
2.0%
12.3%
309
2.1%
128.9%
135
1.2,%
650.0%
=
1984
1983
1982
1991
=
==
Monetary Fund. Volume 3?, Yearbook, part I,
International
Lagoven "Data on Petroleum and Economy of Venezuela".
=======m=
=====
Iron Ore: TAP CMT3 C:4>
Dom Cows CBs2 C4>
ExportsCBs3 <4>
138.7
154.3
Esportst*3 C1>
8s/* Emports
Check ratio
source:
=
7,255
TOTAL
========
=
14,433 12,668
14,017 I 12,609
16,008
13,889
6,881
10,431
90.7%
92.7p
94.8eI
94.6%
94.9%
94.8%
95.2%
92.5 ;
14.5% -12.2%
- 10. 0%
15. 3% -12.4P.1
33.2%
51.6%
Oil
Steel
=
~0-9101
eiports
per cent of total
interahual change
-
= mi
===
1980
1979
1978
1977
1976
==== =
M= ====
==m
==
evaluate the
success or
failure of the policy. Knowing that CVG
industries are capital intensive,
technology,
and
judging
committee and the new
would seem
that the
with large
amounts of foreign
action of the import substitution
the
industrial strategy
by these
numbers, it
substitution has
been quite modest in real
terms. In my understanding, the actual
implementation appears to
be somewhat
effective. But even though the implementation might
be the right one, that does not mean that the
correct; again
the question
substitute ? Are we
is, at
certain that
strategy itself is
what price
these inputs
we are going to
are going
to be
produced cheaply in the country?
Assuming that
the amounts
substituted are not significant,
we can explain the failure of this strategy in one of three ways:
(1) the
strategy is
so recent
that it
results; (2) the strategy has not
the
main
problems
confronted
hasn't had time to show
been directed
by
(import substitution); (3) it is a
the
towards solving
goal to be accomplished
right
implementation
but a
wrong mandate (import substitution).
Exploring the second and third options together, we saw that
CVG industries were oversized and the logical interest
of CVG is
to reduce foreign dependance in its industries; at the same time,
the
private
sector
industries. This
oriented
is mainly
will explain
industries
and
why
interested
why CVG
the
73
in
export-oriented
is not promoting exportprivate
sector
is not
more
collaborating
with
intensively
suggest
substitution. Also, this strategy
is
government
Venezuelan
entirely
intensive industry development against
preference for
allocate
the
industry, where
resources
among
government in import
to
biased
me
that
towards
the
capital
light manufacturing. This
industries was acquired in its
capital intensive
relation with the oil
the
a
benefits from one or two of them.
74
few
it was
easy for
them to
industries, and reap the
5) CONCLUSIONS:
How
should
we
industrial program?
analyze
We can
the
performance
express
of
Guayana's
our evaluation in political
terms, in economic terms, in financial
rentability or
in social
terms.
Starting with
the political
played an important role in the
democratic process.
CVG
possible;
generous with
state is
when
A strong
approach, we
can say that CVG
strengthening of
government, in
conditions
permitted
AD and
in the
turn made a strong
the
government
was
the program. Today, even with scarce resources the
giving additional
funds
to
the
CVG
program.
If
the
period 1974-79 was biased towards the Guayana Industrial program,
today this tendency is maintained.
Even with
program,
what
investments
proportion in
the
political
are
the
accumulated
support
financial
there?
enjoyed
and
We
economic
should
IMF (table
5.1) show
gains
of the
look
at the
1965.
The figures
that oil still contributed 91
per cent of export earnings, although
that the
first
the Guayana
which Guayana is contributing to total exports and
compare these figures with projections made in
provided by
by
in 1965
planners promised
Guayana region would account for 25 per cent of exports
earnings by 1980.
75
actual investments
I have made an estimate of
actual exports.
relate to
total 45,000
From this
accumulated investments in
The total
were spent
mm Bs
billion US dollars.
equals 16,3
Guayana are 70,000 mm Bs, which
and how they
in the 1974-79 period
distributed in the following way:
15,000 mm Bs / $3,5 billions
Steel (Plan IV Sidor)
3,500 mm Bs / $0,8 billions
Aluminum
30,213 mm Bs / $7,0 billions
Electricity
22,019 mm Bs I $5,1 billions
- Guri Dam
8,194 mm Bs I $1.9 billions
- Transmission
These
figures
are
ones
the
by
provided
normally
CVG;
overruns suggest higher amounts.
In relation to power generation, EDELCA, the operator of the
Caroni River hydroelectric dams
not covering
the power
of Macagua
and Guri
(1OMK), is
generation costs. The Guri dam expansion
decided on during the oil bonanza optimistically assumed domestic
demand
doubling
every
six
years,
but
the
dam
is now being
utilized at mere 60 per cent capacity mainly for problems
in the
construction of the distribution system.
In relation
to the
Aluminum industry
we can
say that the
original investment estimates for the three aluminum projects was
$1.2 billion (Auty, 1986) that would have an value added
millions. However, the implementation
the capital
of those
of $400
projects doubled
cost, eroding competitiveness of all plants. Despite
the
experiences
of
the
first
expansions,
further
growth is
foreseen in order to absorb additional Guri power.
As for
steel, the
worst investment,
the planned expansion
from 1 million to 15 millions tons over the period
been
contained
at
the
provided by Plan IV.
tons in
present
This design
of
4.8 million tons
capacity reached
2.32 million
1983, and today, eight years after the initiation of the
expansion, output has yet
despite
capacity
1975-1990 has
an
expenditure
to
reach
of -$
5
half
of
the
4.8 target
billions, which represents an
overrun of 50 per cent.
We
can
temporarily
easily
say
drained
the
country. And
there is
through
current
the
that
the
Guayana
diversification
a risk
that such
development
possibilities
has
of the
tendencies will remain
industrial strategy of import substitution
and vertical integration of the industries in place. For example,
we can
mention the
following current investments to be directed
towards the region:
ALUMINUM:
Bauxite mines total cost
foreign exch. requirements (IDB)
ALCASA
- Expansion 120 m to 220 m ton
$460 mm (2)
$108 mm (2)
-
$720 mm (1)
$15 mm (1)
5th line of smelter
Purchase of Belgian mill
$640 mm (1)
VENALUM
- 110 m ton expansion
- Purchase of US downstream facilities.
CONARE, wood industry development
foreign exchange req. (IDB)
77
?
?
$86 mm (2)
$34 mm (2)
EDELCA, expansion of electric syst.
foreign exchange req. (IDB)
TOTAL
$1,750 mm (2)
$350 mm (2)
$3,671 mm
1,500 mm Bs. or $100 mm (3)
Orinoco Bridge
Sources: (1) EIU, Venezuela Country report No 1, 1987.
(2) Interamerican Development Bank.
(3) El Universal, Caracas. Assuming 14.5 Bs/US$
Assuming that these will
will not
be overruns,
be the
final costs
we can see that once oversize investments
in energy production are in place, all related
and aluminum)
ambitioning
industries (steel
become oversize in consequence. The steel industry
15
million
forward linkages,
of the
and that they
tons.
The
industry pursuing
and minimum sizeable plants pushed up the size
entire chain
(aluminum smelters,
bauxite exploitation).
alumina production and
From a minimum of 3 million tons for the
bauxite mine, CVG is immediately
production. Making
aluminum
tempted
to
increase
alumina
less questionable further increase in alumina
production, and in consequence aluminum.
Other reasons for the
One,
the
voracity of
miscalculation
of
implementation process, due to
partners and
cost
a lack
the overconfidence
owned enterprises
participation of
are
characterized
foreign capital
for domestic
and
region are:
scheduling
in
the
of adequate international
of the local ones. CVG's state-
technology and efficiency during
would compensate
the Guayana
by
a
very
low
level of
that will would provide modern
the
implementation
phase, and
gaps in technical, managerial and
78
a similar
Second,
operations.
plant
marketing skills during
overconfidence in the stability of high oil prices, which led our
policy
to
makers
even
justifiable
at
the
that
think
of
development
Guyana was
costs, because there would always be
high
available funds derived from oil exports.
at
element
dramatic
most
The
is
present
that,
in
my
understanding, the private sector prefers to participate with the
oil sector instead of
that
emphasis
great
the
of
spite
with CVG,
joint ventures
investing in
CVG
is giving
to
in
the
implementation of an innovative import substitution strategy.
The new exchange measures taken by Venezuela since
the
improved
climate
1986 and
foreign investments (Nov 1986) might
for
improve the actual trends, but there is no doubt that the success
of
the
strategy
new
will
depend on convincing of the private
sector the opportunities offered by CVG.
We can easily see
strategy
industrial
intensive,
in
other
that I gave sufficient
mainly the
the Venezuelan
thesis that
based
on
industrial projects.
a
few
capital-
This strategy of
industrialization was inefficient and concentrated
in Guayana; preventing
or
is
(1973-87)
resource-based
resource base
projects
through this
resources
from
diversifying
manufacturing industries.
reasons
political input
to
in the
79
explain
why
in smaller
I am convinced
that happened,
decision making process that
launched
overambitious
targets,
"overestimating
benefits and underestimating difficulties" (Auty,
It is
without this input
have been impossible to create this completely new pole
of development, building an
employs
1986).
clear to me that a major political input was vital to
the launching of the Guayana project and that
it would
the potential
half
a
million
entirely city
inhabitants
plants. However, the time has come for a
the political
component in
which now
and
houses and
scores of industrial
changing of
the guard:
the decision making process must now
give way to a managerial style
less encumbered
by the political
power accumulated by the Venezuelan government.
It is not merely a question of the government stepping back,
it is also that the private sector must
step forward
and assume
responsibility for the future growth of the Venezuelan economy.
6) BIBLIOGRAPHY
Resource based Industralization and Country
Auty, Richard M.,
Size: Venezuela and Trinidad y Tobago. Geoforum, Vol 17, No 3. pp
325-338, 1986.
Azpurua,
Antonio,
The
Guayana
democratic process, MIT, May 1986.
project
in
the
Venezuelan
Center for Latin American Development Studies, Boston University,
La ventaja comparativa de corto y mediano plazo en la produccion
manufacturera de Venezuela, May 1986.
Convenio CVG - Corpoindustria, Mayo 1984.
Convenio CVG - FONCREI, Julio 1984.
Corporacion Venezolana
de Guayana,
Gerencia de Desarrollo
Regional, La CVG y su enfoque regional, Exposicion del Dr. Rafael
Pena Alvarez y de la Dra. Elba Vicentelli de Mago, Jefe de al
Oficina de Coordinacion de la Corporacion Venezolana de Guayana
ante los integrantes del XII Curso del Instituto de Altos
Estudios de la Defensa Nacional, Cuidad Guayana, Marzo 1983.
--------------------------------,
Gerencia de Planificacion,
Actualizacion del estudio sobre la estructura economica de al
nacion y la estrategia de desarrollo de al region Guayana hacia
el ano 2,000, Marzo 1983.
--------------------------------Gerencia
de
Promocion
Industrial y Minero , La experiencia de la Corporacion de Guayana
y sus Empresas basicas en materia de sustitucion de importaciones
y la promocion industrial, ponencia presentada en la primera
jornada regional de sustitucion de importaciones, Cuidad Guayana
5,6 y 7 de Febrero, 1987.
--------------------------------Gerencia
de
Promocion
Industrial y Minero, La sustitucion de importaciones en las
empresas basicas se Guayana, Abril 1986.
ECLA/UNIDO,
Industrial
Developmnet
Division,
Thoughts on
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1986. Pags 50-65.
Gaceta oficial de la Republica de Venezuela, numero 33.546,
Normas para orientar la demanda de obras, bienes y servicios en
los proyectos ejecutados o financiados por el estado, a objeto de
promover el desarrollo industrial y technologico del pais,
Caracas, martes 2 de septiembre de 1986.
------------------------------------------,
numero
3.881
Extraordinario, Reglamento del regimen comun de tratamiento a los
capitales extrangeros y sobre marcas, patentes, licencias y
regalias aprobado por las decisiones Nros. 24, 37,
37A, 70, 103,
109 y 169 de la comision del acuerdo de cartagena, Caracas:
viernes 29 de Agosto de 1986.
Friedman, John, Regional Development Policy. A
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case
study of
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The MIT Press, Cambridge Massachusetts, 1985.
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Maritza, Cuidad Guayana y la estrategia
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del
Karl, Terry, The Political Economy of Petrodollars: Oil and
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Latin American
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Smithsonian Institute.
Sachs, Jeffrey, External debt and macroeconomic performance in
Latin America and East Asia, Brooking papers on Economic activity
2, William C. Brainard and George L. Perry, Editors, 1985.
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Chap II: The world environment
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ANNEX
1.
List of interview realized in Ciudad Guayana and Caracas.
ALCASA:
Martinez, Celestino - President.
Rodriguez Pulido, Rafael - Vicepresident
Development.
Hermoli, Victor - Construction Division.
Escobar, Victor Hugo - Proyect of extension.
for
Marketing
BANCO DEL ORINOCO:
Useche, Aurelio - Vicepresident.
COMISION PARA LA REFORMA DEL ESTADO (COPRE):
Gabaldon, Arnoldo - President.
Sosa, Carlos - State Enterprises.
CORPORACION VENEZOLANA DE GUAYANA:
Presidency:
Arreaza, Roberto -
Vicepresident.
Gerencia de Promocion Industrial y Minero:
Pena Alvarez, Rafael - General Manager.
Vicentelli de Mago, Elba
Ing. Suarez, Veira
Ing. Ortiz, Daniel
Soc. Sanz, Maria A.
Lic. Morillo, Marbelia
Gerencia de Planificacion fisica:
Chemello, Andres - Gerente General
Oficina para el nuevo puente sobre el rio Orinoco:
Delgado, Maria Engracia.
INTERALUMINA:
Ing. Robles -
President.
SULFORCA:
Monteverde, Jose Antonio - Site engineer.
List of interview realized in Cambridge.
Sosa, Carlos - February 3th, March 18th, 1987.
HARVARD INSTITUT FOR INTERNATIONAL DEVELOPMENT (HIID):
Auty, Dr. Richard - March 17th, March 30th, 1987.
84
and
ANNEX 2
List of abbreviations
AD.
Accion Democratica, Social Democratic Party.
ALCASA.
Aluminum smelter, previous a 50%-50% joint venture
with Reynolds Aluminum.
BAUXIVEN.
CVG-Company in charge of the exploitation
bauxite mines of "Los Pidiguaos".
CONARE.
CVG-Company in charge of the exploitation of the
planted Cariba pine areas in Monagas State.
CARONI.
River, that cross Ciudad Guayana.
COPEI.
Christian Democratic Party.
of
CORPOINDUSTRIA.
Institut in charge of developing small
size enterprises.
and medium
CVG.
Corporacion Venezolana de Guayana.
CVF.
Corporacion Venezolana de Fomento.
ECLA.
Economic Council for Latin America.
EDELCA.
CVG-Company in charge of the development of Caroni
river Hydroelectricity. Macagua I & II, Guri dam.
FONDO DE INVERSIONES DE VENEZUELA.
Fund created to invest the oil windfall.
FONCREI.
Industrial Fund (Fondo de Credito Industrial).
IDB.
Inter-American Development Bank.
INTERALUMINA.
Interamericana de Aluminios. Alumina producer.
MINERVEN.
CVG-Company in charge of
Callao" gold mines.
SIDOR.
Steel producer. Participation of CVG.
VENALUM.
Aluminun smelter. Joint venture Japan-CVG-Fondo de
Inversiones de Venezuela.
the exploitation
of "El